Real Estate Rebound: Retail Leasing Jumps 166% in January-June 2022

The retail sector leasing in India jumped about 166 per cent year-on-year (y-o-y) crossing 1.5 million square feet (sq ft) in the first half of 2022. During the period, the total investment grade mall stock crossed over 77 million sq ft, according to a report by real estate consultancy firm CBRE South Asia.

The report said that among the cities, Delhi-NCR and Pune, followed by Bengaluru and Hyderabad, led the leasing activity, together accounting for more than 70 per cent of the overall retail space take-up. As per the report, pent-up supply is likely to enter the market during H2 2022, and the total supply for the year is anticipated to surpass the pre-pandemic levels.

“Fashion and apparel retailers continued to drive the leasing activity with a share of 32 per cent in H1 2022. Other prominent categories that led the leasing activity during H1 2022 included supermarkets (12 per cent) along with homeware and department stores (12 per cent). The entertainment category, which was impacted the most during the pandemic, has also emerged as one of the top demand drivers during H1 2022, with an 11% share in the overall demand. Leasing momentum is expected to pick up in H2 2022 owing to the anticipated space take-up in newly completed malls,” the report said.

It also said that due to strong demand from retailers across investment grade malls and prominent high streets, rental values increased on a half-yearly basis in select micro-markets across most cities.

Among high streets, rents rose about 5-12 per cent across select locations in Delhi-NCR, Bengaluru, Hyderabad, and Pune, and about 1-3 per cent in Mumbai. While prominent mall clusters in Pune and Delhi-NCR witnessed rental growth of 5-11 per cent on a half-yearly basis, a marginal increase of 1-3 per cent was reported across one mall cluster in Mumbai, it added.

Anshuman Magazine, chairman and CEO (India, South-East Asia, Middle East & Africa) of CBRE, said, “It is evident that retailers have regained confidence and are set for expansion mode. We anticipate that going forward, domestic brands will remain proactive in relocations/expansions, and a strong appetite from international retailers will continue. We foresee retail leasing to touch 6-6.5 million sq. ft. in 2022, 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.”

Ram Chandnani, managing director (advisory & transactions services) of CBRE India, said, “We expect nearly 5.5-6 million sq ft of new investment-grade malls to become operational during the year, an annual growth of nearly 40 per cent. Accounting for nearly an 85 per cent share in the overall investment-grade mall completions, Hyderabad, Delhi-NCR, and Bengaluru are expected to dominate retail supply addition in H2 (second half).”

Chandnani added that Mumbai and Chennai are also anticipated to witness supply addition. Among the consumer segment, fashion and apparel retailers will continue to expand their physical sales networks and pay particular attention to enhancing flagship stores.

Read all the Latest Business News and Breaking News here