Due to poor economic conditions, just one mall opens in March quarter
Due to the poor economic conditions, only one mall is coming up in the last three months. The only mall was developed in Pune which is stuck with the second-highest vacancy level in the country at 27.5 percent. Ahmedabad maintains its tag as the graveyard of Indian retail with a vacancy level of 31.6 percent while the overall vacancy level of country is 14.5 percent in December 2013 quarter.
Mall supply decreased 65 percent year-on-year in the January-March quarter to 3.5 lakh sq ft. While 4 malls across 1.26 million square feet (msf) were postponed, nearly two dozen malls have closed down over the past some years as falling footfalls forced branded showrooms to move out.
Mr. Sanjay Dutt, executive MD, South Asia, Cushman & Wakefield India, says that the E-retailing has become famous and developers have become careful and are doing thorough research on the potential of any location.
Mr. Anand Sundaram, CEO of Pioneer Property Zone, says that some malls are situated in areas that do not have a big catchment and even the designs of those malls are very poor.
The new mall opened in Pune with occupancy of close to 60 percent is delayed by three quarters. In last 24 months, 4 malls were opened in the city. The name of those malls is Phoenix Market City, Amanora Town Centre, Koregaon Park Plaza and Seasons Mall. These malls have a space of nearly 6 million square feet and these malls are half empty.
Notwithstanding this, C&W predicts new mall supply by the end of this year, of 14 million square feet (msf) of which 13.6 msf is still under development. This is nearly 200 percent more than the supply in 2013 of close to 4.6 msf.
Retailers are also feeling nip of high levels of maintenance fees for common areas in malls. High street rentals at Lokhandwala in Mumbai suburbs are going at Rs320 psf whereas a mall in Andheri commands a rental of Rs 400 psf per month.
This is because the retailers such as Tata Trent have decided that Star Bazaar supermarkets will not be established in malls.
Mr. Kishore Bhathija, CEO of K Raheja Group’s Inorbit malls, concluded that some developers are selecting malls as the returns are profitable and paybacks much higher as compared to those for the residential projects.
Source: The Financial Express
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