Demand for retail space remained subdued in April-June quarter: DTZ

NEW DELHI: Restrained consumer spending due to high level of inflation and slowdown in expansion by retailers subdued demand for retail space across the country in the April-June 2012 quarter, according to a report by property advisory firm DTZ India.

As a result, the quarter also saw restrained supply of mall space. Bangalore was the only city to get a new supply of 1.3 million sq ft of retail space. "No new supply was witnessed across other key retail hubs, namely Delhi-NCR and Mumbai, in the quarter," said the DTZ report.

The vacancy levels across the three main cities, NCR-Delhi, Mumbai and Bangalore, stood at 9.96% of the total retail mall stock in the cities. Delhi-NCR and Mumbai registered high vacancy levels at approximately 13% and 10% respectively and Bangalore had a vacancy of 3%.

"The overall retail market sentiments remained largely "tenant favourable" across major cities. Large upcoming supply across most markets coupled with high vacancy rates and restrained take-up levels helped retailers negotiate favourable deals from developers," said the report.

Even though a number of Indian and international retailers want to set up new stores, only a quarter of the new mall developers are expectedto be completed in the next 12 months

"Even as Indian consumers have exhibited a growing demand for luxury and high end imported brands, the steep depreciation in domestic currency value will adversely impact demand for imported products in the short term.

However, most retailers are bullish on the long-term growth potential of retail industry in the country," said Anshul Jain, chief executive officer of DTZ India.

"Moreover, the upcoming festive season in the second half of the year is likely to provide some stimuli to the retail landscape in the country."