Mall rats rejoice!
In the first half of 2018, leasing activity—the rate at which mall spaces were taken up by tenants—in the country’s top seven cities rose 75% compared to the same period last year, according to data from real-estate consulting firm JLL.
“The retail market, which has been experiencing a new lease of life with investment interest returning to the market, has also seen a growth in leasing activities from both international and domestic brands,” JJL said in a report released on Aug. 01.
Surprisingly, the thrust of this revival is coming from the southern cities of Hyderabad and Chennai, and not the usual suspects like New Delhi and Bengaluru.
“There have been no sizeable malls in these markets for almost two years now…there has always been demand in these markets, but serious investors were missing,” said Ashutosh Limaye, associate director, JLL.
Most developers so far focused on Delhi, Mumbai, and Bengaluru. But now they’re also eyeing Indore, Chennai, and Hyderabad because of a growing consumer demand along with investors’ willingness to plow money into these markets.
In the first half of 2018, Chennai saw the highest absorption of mall supply at 950,000 square feet. The southern metropolis currently has 12 malls and is expected to add four more by 2020, according to an October report by real-estate consulting firm Cushman Wakefield.
Hyderabad recorded new supply of 500,000 square feet between January and June 2018. The city is expected to get 11 new malls over the next two years.
“With good quality malls now coming up, brands have been eyeing expansion here (Chennai, Hyderabad, and other smaller cities),” said Limaye of JLL.
Apparel retailers and food players, especially, are keen. For instance, Mumbai-based Major Brands, which has tie-ups with foreign retailers such as Bath and Body Works, Charles & Keith, and La Senza, said it will more than double its store count over the next five years on the back of new mall developments across cities. Swedish brand H&M recently added a second store in Chennai’s Phoenix Market city mall.
Overall, with private equity investors and developers pumping in more money, India is set to get some 90 new malls over the next five years.