The decrease in rentals has been to the tune of around 4 per cent to 7 per cent, compared to the previous quarter

An oversupply of retail spaces in the established high streets has ended up forcing the rentals to drop across the micro-markets of the city.

The decrease in the rental has been to the tune of around 4 per cent to 7 per cent, compared to previous quarter, in locations such as Banjara Hills, Jubilee Hills, Ameerpet and A.S.Rao Nagar.

According to the latest report of Cushman & Wakefield, the retail real estate market in major cities recorded a deferment of more than 30 per cent of retail mall space against the projected supply for the first half of the year.

Here in the city, the report pointed out that the retailers of domestic brands were showing interest to spread their operations in new and emerging residential micro markets such as Chandanagar and Madinaguda.

This was due to the availability of adequate supply and that too at reasonable rentals.

In most of the prominent high streets such as Banjara Hills, Jubilee Hills, Ameerpet and A.S.Rao Nagar, the fall in rental has been attributed to what the report suggested as significant amount of new construction becoming available.

And with fresh mall space supply expected only early next year and existing malls having a vacancy of less than 2 per cent, mall rentals were expected to see a spike as leases in some of these malls come up for renewal in the next few months.

Jaideep Wahi, Director, Retail Services, Cushman & Wakefield say that given the current uncertain economic conditions, the retail markets were showing a largely stable scenario.

“Whilst high streets still remain in favour with retailers, depending on local market dynamics, demand for malls spaces is stable with retailers emphasizing on the ‘quality’ of the spaces being offered,” he says.

The overall report of major cities document Bangalore as witnessing the highest mall supply of 1.50 million sft in H2 2012 with NCR recording highest mall supply deferment of over 80 per cent.

According to Cushman & Wakefield, the fresh mall supply for H1 2012 stood at 2.27 million sft and approximately 1 million sft of expected mall supply was deferred to second half of the year or next year.

The overall vacancy rate for major cities as of H1 2012 stood at 19.6n per cent marginally higher than the previous quarter.

The rental values across most mall destinations within these cities remained largely stable, except for certain micro markets in Bangalore, NCR, Kolkata and Mumbai where mall rentals have seen a growth over the previous quarter in the range of 2 per cent to 13 per cent.

During the same period, some prominent high streets across major cities recorded higher increase in rental values as against malls, reflecting the bent of interest amongst retailers for high street properties, the report says.


Retail market records lowest mall vacancy October 26, 2012