Demand from international and domestic brands and retailers continued to strengthen throughout 2013; with the second half of the year witnessing an increase in demand for quality retail space in Delhi-NCR, Pune and Chennai—according to the findings of CBRE’s latest report, India Retail Market View H2 2013. The total organised retail supply in 2013 stood at approximately 4.7 million sq.ft., witnessing a strong y-o-y growth of about 78 percent, over the total mall supply of 2.5 million sq.ft. in 2012.
Most of the supply in 2013 was concentrated across tier II cities; however, 2014 is likely to witness supply addition in the key hubs of NCR and Mumbai. The demand from global retailers in the Delhi-NCR and Mumbai markets remained strong, as more retail groups sought space in prime shopping centers, as opposed to standalone high street outlets, says the report.
Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia, said: “Despite ongoing uncertainty, retail real estate witnessed good activity during 2013 with a number of international brands entering and expanding across key cities. The year 2014 is expected to remain positive for the retail sector, with existing brands expected to ramp up operations and new brands look to making their India entries. Although domestic retailers have been performing steadily, they face competition from global retail groups, especially in the apparel and F&B segments.”
Global players such as Starbucks, Krispy Kreme, Dunkin Donuts, Forever 21, Zara and Superdry expanded their presence across the country’s leading cities; while retailers in the luxury and bridge-to-luxury segments were particularly active, with brands such as Brook Brothers, Missoni, Michael Kors and Emilo Pucci making inroads into the country’s market places.
Rental values displayed mixed trends across the top cities during H2 2013. While traditional high street markets—such as Khan Market (Delhi) and Brigade Road, Commercial Street (Bangalore) witnessed an increase in rental values, the shopping hubs of Eastern Mumbai and South Bangalore observed a rental decline in H2 2013 compared to first half of the year. Cities such as Hyderabad, Chennai and Kolkata largely witnessed stability in pricing across most micro-markets; while Pune saw an increase across its high streets, even as its mall rentals remained stable.
Going forward, the limited availability of quality retail space in core locations is likely to pose a greater barrier to new retailer entry in a number of key markets—including Delhi NCR, Mumbai and Bangalore—as opposed to prohibitive rentals. On account of such constraints in quality supply, select developments are likely to witness greater than average increment in rentals because of retailer preferences for such spaces.
