Mall space in India is anticipated to rise by approximately 8 million sq ft this year with a substantiate portion is this anticipated to be concentrated in Hyderabad.
According to a report by Cushman & Wakefield, In Q1, 2024, leasing activity in Hyderabad improved by 45 per cent over the previous quarter to 491,000 sq ft.
This rise is particularly notable in key areas such as Banjara Hills, Nallagandla, and Kokapet, where average rentals have increased by around 15-25 per cent over recent quarters due to burgeoning demand.
Saurabh Shatdal, Managing Director, Capital Markets and Head-Retail, India, Cushman & Wakefield, notes, the Indian retail landscape is witnessing a noteworthy transformation with pre-commitment rates in Grade A malls rising and their vacancy levels reducing to single digits within a short span post-launch. This stands in stark contrast to the pre-pandemic scenario where malls typically took 4-5 quarters to achieve occupancy rates of 80-85 per cent. This trend is likely to persist, particularly in the case of superior malls, indicating a supply-constrained market, adds Shatdal.
The report highlights Delhi-NCR received nearly 0.26 million sq ft of leasing across malls and main streets in Q1, 24, followed by Pune at 0.19 million sq ft and Bengaluru at 0.18 million sq ft. Leasing activity across Chennai increased by 36 per cent Q-o-Q to 0.12 million sq ft, while Ahmedabad recorded a healthy main street leasing volume of 67,000 sq ft during the period.
As evident from the burgeoning demand for luxury and premium retail spaces, there has been a notable shift in India’s consumer behavior post pandemic. Recent NSSO data indicates, consumption expenditure of an Indian household has doubled over the past decade, with spending on discretionary items rising substantially as compared to mass products. This shift in consumption patterns is driving the demand for premium products and experiences.
Moreover, there is a rise in demand and year-on-year rental growth in prominent high streets across key Indian cities, with Hyderabad leading the rental growth. Ahmedabad, Bengaluru, Delhi-NCR, Pune, and Mumbai recorded rental appreciation ranging from 7-10 per cent on a year-on-year basis.
The report also reveals a notable decline in the vacancy rate of Grade-A malls across several cities, particularly in Delhi-NCR, Pune, and Chennai, in the first quarter. This decline is attributed to the absence of new Grade-A malls commencing operations during Q1 2024, contributing to a demand-supply imbalance to some extent. Notably, institutional-grade or listed developer assets boast very low vacancy rates in most major cities.
