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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