The retail footfall dipping in the city, Ahmedabad has seen the highest vacancy of 34 per cent in its malls for the second quarter of 2012 among top eight cities, says the latest report released by Cushman & Wakefield. Joining other cities like Mumbai, Chennai, Kolkata, Hyderabad, NCR and Pune, Ahmedabad also saw zero supply of mall space in the second quarter of 2012.
Following Ahmedabad in mall vacancies are NCR (28 per cent), Pune (25 per cent) and Bengaluru (12.6 per cent).
"In Ahmedabad, the demand-supply scenario is currently witnessing a serious mismatch as overall city level vacancy rates are quite high at around 34 per cent. The prime reason for this is there is a shortage of ‘quality’ supply in the city. In the high streets, rentals remained stable in the face of limited demand and churn." said Jaideep Wahi, Director, Retail Agency, Cushman & Wakefield India.
Covering eight major cities, the report recorded a deferment of more than 30 per cent of retail mall space against the projected supply for the first half (H1) of the year. A fresh mall supply for H1 2012 stood at 2.27 million sq ft (msf). Approximately one million sq ft of expected mall supply was deferred to second half of the year or next year. The overall vacancy rate for the major cities as of H1 2012 stood at 19.6 per cent marginally higher than the previous quarter.
NCR saw the highest mall supply deferment of over 80 per cent, ensuring the city maintained vacancy levels at 28 per cent. NCR saw only 120,000 sq.ft of mall supply in Q1 and no supply in Q2 2012.
Bangalore witnessed the highest mall supply of 1.5 million sq. ft. (msf) in H1 2012. The retail activity in the city continues to remain strong as the new mall supply became operational with 90 per cent occupancy, whilst overall city level mall vacancy stood at 12.6 per cent. "This slowdown in mall construction need not be viewed as a negative growth indicator for the retail real estate segment. The current pace is, in fact, expected to help in maintaining a healthier supply to demand equation; especially for oversupplied micro-markets. With high vacancy levels as well as cautious expansion plans of retailers, the deferment of supply is a necessary measure to bring stability in the retail market," Wahi added.
According to the report, rental values across most mall destinations within these cities remained largely stable, except for certain micro-markets in Bengaluru, NCR, Kolkata and Mumbai where mall rentals have seen a growth over the previous quarter in the range of 2-13 per cent.