As per the report, between 2018-2020 the demand for new malls will be approximately 15 msf.
Around 19.4 million square feet (msf) of new mall space or retail space is expected to come up by 2020 across India, with 2018 likely to witness highest supply since 2011.
In fact, National Capital Region (2.3 msf), Hyderabad (2.2 msf) and Chennai (1.5 msf) will see highest supply during the on-going calendar year. On the contrary, in Mumbai the new mall supply is set to decline by 13% Year-on-Year in 2018, states JLL India’s latest study on malls across the country.
As per the report, between 2018-2020 the demand for new malls will be approximately 15 msf.
In Delhi, most of the new malls will be in the peripheral regions and would be catering to the growing catchments of Noida, Gurugram and Greater Gurugram. While Delhi – NCR already has the highest inventory, the growth of retail sector points out to the further possibilities of growth.
While Chennai will experience a surge in new completion mall spaces as it has seen extremely restrained development activities over the last few years, mostly due to strong preference by retailers for traditional high street locations. Whereas, Hyderabad has not seen any new supply in the last year and has had a history of sporadic additions from time to time.
“We expect a parallel rationalisation of existing mall spaces which will help the market avoid an oversupply situation. As a natural course of events, we can expect a few malls to close down or temporarily suspend their operations for repairs, renovation and upgrades. This will help the market create the necessary balance to maintain the rental values,” read JLL India study.
“The retail sector of India is going through a fresh period of growth which is backed by strong economic fundamentals. As we have seen an increase in interest from investors which was seen with investments of over $ 750 million in 2017. Encouraged by the urbanisation, young population and rising proportion of nuclear families in urban locations, over 70% of consumption growth in the next 15 years is expected from population aged 15-59 years, with increased per capita consumption. This along with the opening up of the Foreign Direct Investment route for retail brands entering into India, will further boost retail investments,” said Ramesh Nair, Chief Executive Officer
and Country Head, JLL India.
In 2017, around 5 msf space vanished from the retail market due to shutting down of 28 malls. Most of the shut downs happened in the markets of Delhi / National Capital Region and Mumbai. Among the factors for shutdown is excessive supply of retail spaces and presence of too many malls. This resulted in malls performing below par. Mumbai which has in the past few years seen a slowdown in retail development activities will continue to witness remain cautious.
“Despite the onslaught of new retail formats like e-commerce, tele-marketing and others, we will continue to see a steady growth in brick and mortar form of retail as the sector is pegged to grow to Rs 1 trillion by 2020, at a CAGR of approximately 15%,” added Nair.
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