32 new malls are expected to come up by 2020 reports Cushman & Wakefield

By Realty Quarter Bureau

Main streets rule the retail leasing landscape in top 8 Indian cities. As many as 14.22 million sq ft of new malls are currently under construction and 0.85 million sq ft of fresh mall supply is expected in the first quarter of 2018, says new research by Cushman & Wakefield, a global real estate consultant, as per the news report.

In first quarter of 2018, of the total leasing transactions recorded in top 8 cities, more than 80 per cent were on main streets vis-à-vis malls. Of the total reported leasing of 1,264,423 square feet (sf) in top 8 cities, main streets accounted for 1,022,345 sf, it says.

While Ahmedabad, Hyderabad and Bengaluru clocked almost 100 per cent of city’s leasing on main streets in the first quarter of 2018, the share was considerably higher in other cities as well, it says.

Although the first quarter of 2018 saw only 0.85 msf of new mall supply, around 14.22 msf is currently under construction and 32 new malls are expected to come up by the year 2020. India is a key retail market with a 1.3 billion population, 50 per cent of which is below the age of 25, a growing middle class, high urbanization rate and a fast-growing economy. These features promise a growing retail spend power and hence a shining future for the sector.

‘With a strong demographic dividend of young aspiring middle class and favorable government policies allowing 100 per cent FDI in single brand retail, there is a high degree of interest from investors and developers to increase their stakes in retail assets in the country. There is a strong pipeline of under construction malls in top eight cities of India. However, as new quality mall supply is expected to take couple of years to be operational across the country, transactions are likely to increase further on the main streets,” Anshul Jain, country head and managing director India, Cushman & Wakefield.

The demand for main streets has heightened in absence of new mall supply in most of these cities coupled with scarcity of available quality space in the existing malls. The largest contributor to main street leasing has been the apparel segment followed by food and beverages. Online players have also established considerable offline presence by opening brick and mortar stores on main streets for better visibility as compared to malls, it says.

In the near future, main streets that promise high visibility and footfalls to retail brands are expected to continue to drive majority transactions with key demand coming from apparel retailers.

Indian mall space retail continues to witness interest from private equity players, who are keen to capitalize on the rising middle-class consumption in both tier I and tier II cities. Some of the international PE funds that are looking at getting controlling stakes or complete ownership of retail assets in India include the likes of Blackstone Group, Canada Pension Plan Investment Board (CPPIB) and the Xander Group, it said.