Hyderabad: On the lines of growth Hyderabad is showing in the office space absorption, the city’s retail is also showing healthy improvement in its absorption. Hyderabad saw a retail absorption of 31,000 sq ft during Q1 2018, registering a 29 per cent jump from 24,000 sq ft registered in Q1 of 2017.
Real estate services firm, JLL, notes that retail mall absorption recorded a positive trend in Q1 2018 (January – March), nationally. Total absorption across top seven cities of India was recorded at 3,52,000 square feet (sq ft) recording a rise of 69 per cent over the same time last year. The supply side of the market recorded an addition of only 1,60,000 sq ft of fresh mall supply by adding just two new shopping malls in Delhi-NCR.
Of the total leasing activities, 84 per cent took place in Delhi-NCR which recorded 2,92,000 sq ft of mall space absorption. Chennai saw an absorption of 17,000 sq ft.
Total mall space supply recorded in Q1 2018 was lower by close to 90 per cent from same time last year and was recorded at just 160,000 sq ft contributed by 2 shopping center in Delhi – NCR.
The vacancy levels across mall spaces remained stable across most markets with the exception of Delhi-NCR (18%), Hyderabad (11%) and Chennai (7%) that saw marginal decline over past quarter.
Ramesh Nair, CEO and country head, JLL India said, “The increased pace of leasing activities is heartening as it signals towards a growth phase for retail in India. Brands, both national and global, are looking at increasing their presence in key markets, to capitalise on the stability and growth in the economy. Having said that, customer preferences both for brands and retail malls have been altered and today customers view retail malls not only as shopping centres but also as entertainment hubs and lifestyle destinations. Brands are also discerning about the location of their stores and are therefore choosing to align with retail malls.
Ramesh further added, “Landlords in India are actively adjusting tenant mixes and are placing greater emphasis on the experience of shopping. International brands have been entering the country and are expanding rapidly in the past couple of years, with more expected to look for quality space across the country. Some international brands like Kiabi, Mavi, Avva, Colin’s, Damat, Tudba Deri and Dufy are likely to enter the country in the next few months.”
In the past few months, private equity have taken increased interest in key leasehold retail assets across the country. A leasehold retail property usually has a higher probability of success as the developer is actively involved in the key functions of mall management, especially tenant management.
Various new regulations like easing foreign investment for single-brand retailers, longer shopping hours and an updated framework for establishing real estate investment trusts (REITs) have attracted the attention of various private equity funds.