Retail sector leasing in India increased by about 166% Y-o-Y, crossing 1.5 million square foot (sqft), shows a recent report by CBRE South Asia. According to the report, titled ‘CBRE India Retail Figures H1 2022’. the total investment grade mall stock crossed over 77 million sqft in the first half of this year.
The rally in retail leasing activity was led by Delhi-NCR, Pune, Bangalore and Hyderabad, says the report adding that these cities together accounting for more than 70% of the overall retail space take-up.
As per the report, the pent-up supply is likely to enter the market during H2 2022, and the total supply for the year is anticipated to surpass the pre-pandemic levels.
Fashion and apparel retailers continued to drive the leasing activity with a share of 32% in H1 2022. Other prominent categories that led the leasing activity during H1 2022 included supermarkets (12%), along with homeware and department stores (12%). The entertainment category, which was impacted the most during the pandemic, has also emerged as one of the top demand drivers during H1 2022, with an 11% share in the overall demand. Leasing momentum is expected to pick up in H2 2022 owing to the anticipated space take-up in newly completed malls.
The report also observed that due to strong demand from retailers across investment grade malls and prominent high streets, rental values increased on a half-yearly basis in select micro-markets across most cities. Among high streets, rents rose by about 5-12% across select locations in Delhi-NCR, Bangalore, Hyderabad, and Pune, and about 1-3% in Mumbai. While prominent mall clusters in Pune and Delhi-NCR witnessed rental growth of 5-11% on a half-yearly basis, a marginal increase of 1-3% was reported across one mall cluster in Mumbai.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said: “It is evident that retailers have regained confidence and are set for expansion mode. We anticipate that going forward, domestic brands will remain proactive in relocations/expansions, and a strong appetite from international retailers will continue. We foresee retail leasing to touch 6-6.5 million sqft in 2022, twice the 2021 quantum. Additionally, owing to the tremendous growth potential, we expect many international brands to launch stores in tier II and III markets.”
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said: “We expect nearly 5.5 – 6.0 million sq. ft. of new investment-grade malls to become operational during the year, an annual growth of nearly 40%. Accounting for nearly an 85% share in the overall investment-grade mall completions, Hyderabad, Delhi-NCR, and Bangalore are expected to dominate retail supply addition in H2. Moreover, Mumbai and Chennai are also anticipated to witness supply addition. Among the consumer segment, fashion and apparel retailers will continue to expand their physical sales networks and pay particular attention to enhancing flagship stores.”
