Demand-supply mismatch hits rentals
The mismatch between supply and demand for retail space in the southern India is growing worse. The real estate builders continue to build malls in a saturated market and as a result, by 2014 there will be an increase in supply by 100 percent.
Over the next two years, Bangalore will have 27.602 million square feet of operating space, an oversupply of 141 percent. Similarly, Hyderabad will have 18.853 million square of mall space leading to a potential 114 percent oversupply by 2014.
According to a real estate expert, the demand for retail space will keep a pace in bigger markets like Delhi-NCR and Greater Mumbai. South India has around 50 million sq ft of operational mall spacees across 130 odd malls.
Real estate biggies like Century Real Estate, Prestige projects, Sobha Developers and Suraj Developers have either launched or planning to launch mall projects.
Due to this mismatch, rental rates are either the same or has increased just marginally by four to nine percent for city centre locations in Bangalore, Chennai and Hyderabad in 2012.
Retailers who are looking at expanding their presence is expected to get benefited because of the excess supply of retail space. HyperCITY Retail India, one of the major retailers, is planning to increase the number of stores by 2016 from 13 now spread over 30,000 to 50,000 sq. ft
If sources are to be believed then out if 175 operational malls across India, only 30 are functioning and performing while the rest is running at a loss.
It further says that top 20 cities in the country can absorb per capita mall space between 1 sq ft and 1.5 sq ft depending on the economic growth projections. However, currently it is below 1 sq ft for all metros.
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