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Retail segment: Market analysis and future predictions

Market analysis of retail segment in the last quarter of 2012 in major Indian cities is given as under:

 

National Capital Region:

During the fourth quarter of 2012, in primary streets of Khan Market, Greater Kailash I M Block Market and South Extension I and II within Delhi, substantial profits were made within the retail segment. However, limited availability of quality mall spaces was observed in prominent places within NCR.

 

Mumbai: Stability was observed in mall rentals during the fourth quarter of 2012. This was primarily because of low vacancy levels due to low transaction activity as well as limited churn in areas such as Linking road, Colaba, Kemps Corner, Fort and Lokhandwala. However, a matter of concern for Mumbai retail segment is lack of quality retail spaces. Established malls in Lower Parel, Malad, Goregaon, Mulund, Vashi and Thane already have limited available mall space.

 

Bangalore: While in streets including Brigade Road, Commercial Street and Jayanagar 4th Block, 11th Main there has been a minor appreciation of rental value, places like Vittal Mallaya Road saw a decrease in rental values due to prevailing high rental rates and some vacant spaces. An exceptional hike of 58% was observed in the rental value of retail spaces in Mallaya Road in comparison to the same recorded in 2011.

 

Ahmedabad: In the last quarter of 2012, a number of malls have vacant spaces. So, less supply of fresh property in this segment is expected. However, due to moderate leasing activity witnessed in malls such as those at C. G. Road, Law Garden and S. G. Highway, with the exception of Alpha One, the rental market remained stable in the fourth quarter of 2012. At Alpha One, as there were a number of vacant retail spaces, the rental rates increased by around 20 percent.

 

Prediction for the retail segment for the first quarter of 2013

 

National Capital Region: As mentioned above, as there was limited supply of quality mall spaces, in the first quarter of this year, fresh mall supply of around 2 million square feet is anticipated to complete in locations in Noida, Greater Noida, Gurgaon and West Delhi.

 

Mumbai: This year, only one new mall is expected to deliver at Thane. However, as both Indian and international retailers prefer main street locations, there might be increase in rentals in areas like Lokhandwala, Andheri, Colaba and Linking Road.

 

Bangalore: Due to the expansion plans of different brands, the retail segment of real estate is expected to witness enhanced leasing activities in 2013. Experts anticipate that in Bangalore a supply of 400,000 sq. ft. might take place in the micro market of Bannerghatta Road during Quarter 1 of 2013.

 

Ahmedabad: Due to a large number of vacant retail spaces, mall rentals in major micro market might witness a decrease. However, an exception might be observed with respect to such spaces in Vastrapur which has low vacancy levels.

 

Conclusion: As the Indian Government is in the process of revising laws pertaining to Foreign Direct Investment, the market might witness an increase in international players in the near future. This might be beneficial for the retail segment. However, the predictions of cities including NCR, Mumbai, Bangalore and Ahmedabad are solely based on the way the market functioned in the previous quarter and the resultant expectations in the next quarter due to the basic formula of economics that supply ought to meet demand.

 

 

This entry was posted in Bangalore, FDI, Gurgaon, Investment, Mumbai, NCR Delhi, Newsletter, NOIDA, Rentals. Bookmark the permalink.

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