Q3 Retail

Cushman & Wakefield, world’s leading international property consultancy firm, estimates that India will see close to 34 new malls by 2020 in the top 8 Indian cities[1]. Totaling approximately 13.6 million square feet (msf), the new supply will add approximately 20% to the total available mall inventory in these cities. The retail sector has been encouraged by an upward trend in mall space leasing which was up by 55% in the period January – September 2017, recorded at 2.3 msf. New supply for the same period saw a year – on – year (y-o-y) declined of 63% to be recorded at 1.9 msf.

There is now a regained confidence amongst developers to pay heed to this sector as investors show greater commitment towards it. An estimated INR 79.59 Bn has been invested by Private Equity funds in malls between January 2016 – September 2017. After a prolonged period, slow growth, the retail sector has regained momentum and its trust in traditional brick and mortar retail space acknowledging the role that will play in the future growth of the sector. Increasingly it is

understood that retail malls will continue to hold importance as a ‘destination’ going beyond stores and selling. Consequently, even e-commerce companies are establishing a physical presence through ‘experience’ stores in many malls and on prominent high streets.

"With the estimated size of retail sector pegged at INR 1 trillion by 2020, at an approximately 15% CAGR between 2016 – 2020, the scope for retail real estate remains high. With foreign retailers entering the country and expanding aggressively, brands are preferring to be located in malls that are likely to see higher occupancy levels. Hence, over the next few years, investors will be on a lookout for professionally managed, well-run malls that would witness yields improving and rental values inching up, thereby improving returns for investors" (Anshul Jain - Country Head & Managing Director, India, Cushman & Wakefield)

Hyderabad will be witnessing the largest number of new retail malls at 11 new malls, more than doubling its current mall inventory for under 3 msf to over 6 msf by 2020. Given the rather low ratio of malls space today in the city, this would be a welcomed addition. The additional new malls will be spread across the city in areas of Madhapur, Gachibowli, Panjagutta, Begumpet, and Uppal amongst others. With the city seeing rapid increase in office spaces with high interest from occupiers, we expect the population strength of the city to go up, which will boost demand for retail and mall spaces in the city.

Delhi – NCR and Bengaluru will each add 8 and 6 new malls, contributing about 4 msf and 3 msf of additional mall spaces respectively by 2020. The only city that is not expected to see any change in their current mall scenario will be Ahmedabad where, as of now, there are no new announced projects for malls. Ahmebabad has remained a largely high street mall due to customer preference to remain at their traditional locations for retail activities

For more information, please contact:

Piyali Dasgupta. + 91 9833571204

Email : piyali.dasgupta@ap.cushwake.com