HYDERABAD: The retail leasing in Hyderabad has surpassed pre-pandemic levels as the demand doubled in 2021. Hyderabad recorded a staggering 72 per cent quarter-on-quarter growth in retail leasing with more than 240,000 sq ft of space leased in the fourth quarter (Q4) of 2021.
The city recorded more than 50 deals in Q4 2021, exceeding the quarterly average of 31 deals during 2019 (pre-pandemic). For the entire 2021, Hyderabad saw a double jump in the gross leasing activity with nearly 1.4 million sqft of space across 200 deals.
According to the Cushman & Wakefield report, the city witnessed significant traction in Q4 and accounted for 30 per cent of the overall deals compared to a subdued activity recorded in the previous quarter.Pent-up consumer demand post the second Covid wave coupled with higher discretionary spending during the festive season are among the reasons for the confidence of retailers.
Fashion and apparel drive demand in city
Superior grade malls have witnessed increased footfalls and store-level sales are also touching pre-pandemic levels. Fashion and apparel category was the principal demand driver, while the core submarkets saw traction. Fashion and apparel accounted for the highest proportion of the leasing in Q4 2021 with 62 per cent share compared to 36 per cent in Q3.
Multi-brand retail stores and affordable lifestyle brands such as Westside, Zudio, Max, Levi’s, and Mugdha leased spaces in core micro-markets such as AS Rao Nagar, Ameerpet, Punjagutta, Himayatnagar, Begumpet and Somajiguda. Main streets in these core submarkets recorded traction accounting for 25 per cent of the gross leasing activity in 2021.
Sustained footfalls and affordable rentals are among the top factors that drove retailers to the main streets. Hyderabad recorded a mall completion of average grade with 2,50,000 sq ft in Q4 after a gap of six quarters in the core submarket of Kavadiguda (Praga Mall).
The mall comes with limited occupancy, as a result of which overall vacancy has risen from 19 per cent to 22 per cent as of Q4 2021. However, tight vacancy levels of around five to six per cent prevailed in the superior malls due to the high demand for quality spaces and lack of new or relevant supply for nearly two years.
Superior malls continue to attract retailers, particularly in luxury gifting, premium footwear, fashion and apparel categories, which is expected to tighten vacancy further going forward. Superior malls and main streets in select locations such as Madhapur, Kukatpally, Banjara Hills, Kondapur, and Himayat Nagar are likely to see a slight increase in rentals in the near-to-medium term.