Domestic brands drive up retail space absorption in Hyderabad

Leasing mainly by fashion, apparel brands with a 35% share in total absorption

September 03, 2022 12:27 am | Updated 12:27 am IST - HYDERABAD

The retail space absorption in Hyderabad stood at approximately 0.24 million sq.ft. during the first half of 2022.

The retail space absorption in Hyderabad stood at approximately 0.24 million sq.ft. during the first half of 2022. | Photo Credit: Representational Photo

The retail space absorption in Hyderabad stood at approximately 0.24 million sq.ft., led by domestic brands while the retail space supply in the city was at 0.37 million sq. ft. during first half of 2022. Additionally, with improving sentiments towards offline stores, space take-up increased across malls on a half-yearly basis.

The leasing was mainly driven by fashion and apparel brands with a 35% share in total absorption, followed by entertainment (34%) and consumer electronics (10%).

CBRE South Asia Pvt. Ltd, real estate consulting firm, in the findings of its latest retail report, ‘CBRE India Retail Figures H1 2022’, says that key transactions recorded in the capital are as follows:

INOX leased 50,000 sq.ft. at Necklace Pride Mall, Moviemax leased 25,000 sq.ft in high street in Eastern Hyderabad and Decathlon leased 20,000 sq.ft at Necklace Pride Mall. Retail players from fashion and apparel and food and beverage categories have also set up new stores in Kukatpally and Madhapur in western Hyderabad. 

The report indicates that the retail sector leasing in India increased by about 166%, crossing 1.5 million sq.ft. year-on-year with the total investment grade mall stock crossing over 77 million sq.ft. Delhi-NCR and Pune, followed by Bengaluru and Hyderabad, led the leasing activity, together accounting for more than 70% of the overall retail space take-up.

Leasing momentum is expected to pick up in the second half of the year, owing to the anticipated space take-up in newly completed malls. The report also observed that due to strong demand from retailers, rental values had increased on a half-yearly basis in select micro-markets across most cities.

Rents rose by about 5-12% across select locations in Delhi-NCR, Bengaluru, Hyderabad, and Pune, and about 1-3% in Mumbai. “We foresee retail leasing to touch 6-6.5 million sq.ft. in 2022, which is twice the 2021 quantum. Additionally, owing to the tremendous growth potential, we expect many international brands to launch stores in tier II and III markets,” said chairman and CEO-India, South-EastAsia, Middle East and Africa, CBRE, Anshuman Magazine.  

CBRE India managing director (Advisory and Transactions Services) Ram Chandnani said: “We expect nearly 5.5 to 6 million sq.ft. of new investment-grade malls to become operational during the year, an annual growth of nearly 40%. Accounting for nearly an 85% share in the overall investment-grade mall completions, Hyderabad, Delhi-NCR, and Bengaluru are expected to dominate retail supply addition in the second half of the year.”

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