Resurgent Retail - Powered by Rising Domestic Consumption
RESURGENT RETAIL
The aftereffects of the prevailing tightness in the retail real estate market are visible. Major malls that commenced operations in 2023, saw a high level of pre-commitments and, therefore, enjoyed extremely low vacancies of 4%-17% within a few quarters of launch. Need of the hour is to add more Grade-A mall supply
Vacancy Rate at Commencement of Operation
Quarter of Completion
Year of Completion
Mall Name
GLA (SF)
Pacific Premium Outlets
Q1
2023
220,000
10%
Palladium Mall - Ahmedabad
Q1
2023
750,000
15%
Phoenix Mall of Millenium
Q3
2023
1.1 Million
14%
Lulu Manjeera
Q3
2023
450,000
12%
Phoenix Mall of Asia
Q4
2023
1.2 Million
17%
KOPA Mall
Q4
2023
325,000
10%
Jio World Plaza
Q4
2023
475,000
4%
Source: C&W India Research
As the desired quality of spaces are in short supply the brands find this discomforting and gives the retail landlords greater leverage while negotiating on commercials. A comfortable situation for all stakeholders would be to have a more balanced or neutral market scenario and, for that, new supply needs to be added at greater frequency. For instance, if the top 8 cities combined were to reach an RSPC of 1.0 (equivalent to that prevalent in Indonesia currently), there is a need of an additional 55 MSF of quality Grade-A malls. Here, it will be pertinent to note that India’s per-capita income is likely to equal that of Indonesia’s current income over the next 4-5 years. Therefore, we believe the opportunity for Indian mall developers to deliver this quantum would be approximately 4 years – i.e. ~12.5 MSF per annum of new supply addition. It could vary across different cities, with some cities where the under-penetration is severe wanting to add more supply more heavily.
India Grade-A Mall Supply Analysis (for top-8 cities; data in million SF)
61
55
18
Existing as of 2023
2024F - 2027F
If RSPC=1; desired supply 2024-27
Source: C&W India Research analysis
22
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