You are here: Home » Companies » News
Business Standard

Mall mania spreading across the country

Richa Singh  |  Mumbai 

developers are cashing in on the boom. Over 200 malls with a combined retail space of 2.5 crore square feet are sprouting across the country at an investment of Rs 12,500 crore, eight times of Rs 1,500 crore invested till last year.
Leading the mall development drive are in Chennai, DLF's Promenade in Delhi, Unitech's Great India at Noida, each measuring around 10 lakh sq ft.
The list of top developers including Growel's 7.5 lakh sq ft complex in Mumbai as well as the six lakh sq ft malls each of Prestige group at Bangalore and Pittie group at Pune.
Malls have, in fact, become a focus of retail expansion. As Manoj Motta, head of retail and leisure property services, Knight Frank India, put it, "Consumers are now realising that they can get a far better shopping experience at the same price points as available at high streets and retail outlets."
Moreover, malls are being seen as a high-return investment. Most complexes start fetching returns between 25 to 50 per cent over a seven year period after becoming operational. Increased rentals after a five-year cycle are further expected to boost returns.
However, rentals are much higher in bigger cities. This means that exorbitant rentals could render a mall in Mumbai less lucrative than, say, a mall in Pune.
As per an ICICI Property Services research, Mumbai commands rentals between Rs 150-200 per square feet (psf) as against Rs 50-200 in Delhi, Rs 40-100 in Bangalore, Rs 25-80 in Chennai, Rs 25-125 in Pune and Rs 70-120 in Kolkata.
Also, property consultants have already started talking about an impending correction in lease rentals.
"Developers are selling shops in these centres to investors after first leasing them out to tenants. This practice helps them get a better value for their property as it already starts earning. But it does not reflect the true price of the underlying real estate," says a source.
The issue of rentals notwithstanding, shopping and are clearly on the high growth track. According to the ICICI study, malls are estimated to become a Rs 38,447 crore sector by 2010.
The investments will only jack up further once the crippling minimum requirements of 100 acre area and Rs 100 crore for foreign direct investment (FDI) are relaxed.

First Published: Mon, October 04 2004. 00:00 IST