Despite countrywide shortfall in additions in mall capacities, Delhi and its neighbouring regions witnessed 24 per cent vacancy in its mall space in 2008, the annual retail report issued by international real estate consultant Cushman & Wakefield has indicated. The mall rentals in Delhi also showed a proportionate decline in the range of 12-22 per cent, the report said. Vacancy levels in Pune malls were also high at 15 per cent.
However, the significance of the drop in occupancy levels in Delhi’s NCR region was partially offset by 12 per cent increase in mall capacities during the year. Pune had no consolation as it witnessed 67 per cent decrease in mall supply in 2008 as compared to the previous year.
The report indicates that as much as 11 million sq ft of expected mall supply in the year 2008 was deferred to the future, which is a shortfall of 54 per cent from the projections made at the beginning of the year. Of the proposed 74 malls at the beginning of Q1 2008, only about 34 were delivered through the year 2008. At 9.7 million sq ft NCR witnessed the largest share of this supply, it noted.
Rajneesh Mahajan, director of retail services at Cushman & Wakefield said, “From the projected supply of 20.8 million sq ft space in Q1 2008, we will see a spill over of about 10 million sq ft development in 2009/ 2010. Lack of funds leading to construction delays and cautious expansion by retailers has resulted in slow absorption of retail space in malls.”
With an apparent softening of demand, Hyderabad witnessed the least mall space at only 10 per cent of the initial projections, followed by Pune (20 per cent), Chennai (22 per cent), Bangalore (27 per cent) and Kolkata (36 per cent). NCR and Mumbai, however, received a relatively higher share of the projections with 67 per cent and 47 per cent, respectively.
However, owing to the shortfall in mall supply in 2008, the vacancy rates have remained at a national average of 9 per cent.
According to the report, of the 4.3 million sq ft expected in Mumbai at the beginning of the year, about 2 million sq ft (7 malls) entered the market by the end of the fourth quarter, recording 30 per cent increase over last year’s supply. Mall vacancy in the city was registered at 10.2 per cent.
Bangalore witnessed approximately 0.34 million sq ft of supply in 2008 across 3 malls, which is only about half the supply as compared to last year.
Chennai was expected to see three malls enter the market this year, but witnessed 0.17 million sq ft of mall supply in the form of a single mall. Vacancy levels in the city were estimated to be 1.4 per cent.
Hyderabad witnessed 0.2 million of mall supply in 2008 as against nil last year, recording approximately 4.7 per cent vacancy.
Of the proposed 12 malls, Kolkata witnessed only two malls getting operational in the year 2008 with approximately 1.37 million sq ft mall space, which is six times more the supply from last year. Vacancy rates in the city were estimated at 5.6 per cent at the end of the year.
