Retail rentals in upscale metro areas dip by up to 44%

NEW DELHI: Retail rentals at upscale locations and shopping malls dropped in most metros in 2008, with retailers ��� plagued by lower sales and high costs ��� turning cautious on expansion plans and shutting down several unviable stores, as per a report by property consulting firm Cushman & Wakefield. The report predicts a further drop in rentals in 2009.

The high streets of Mumbai, which had seen a price appreciation of 100-156% in Q1 FY08, were the worst-hit. Rentals fell sharply in Linking Road (-44%), Kemps Corner/Breach Candy (-41%) and Colaba Causeway (-38%). Mall rentals tanked 20% in Vashi, 17% in Goregaon and 14% in Mulund. Mumbai registered a mall vacancy of 10% as 2 million sq ft of fresh retail space entered the market.

Delhi NCR, which saw 24% vacancy, the highest in the country, too registered massive correction in retail rentals. While the figure for Connaught Place, Karol Bagh and Basant Lok declined 16%, the fall was marginally lower in Khan Market at 14%. West Delhi witnessed a 27% decline in mall rentals. The fall was 12% in South Delhi and 22% in Noida.

���Lower or negative revenue growth over the past year on same store basis and high rental costs of the stores added in 2007/08 have forced retailers to take a relook at their portfolio. The year saw retailers beginning to resize stores, renegotiate rentals and even exit locations where operations became unviable,��� said Rajneesh Mahajan, director of retail services at Cushman & Wakefield.