Mall rentals in Pune remain stable, says a recent report

According to a recent report, the retail real estate market recorded a deferment of more than 30% of retail mall space against the projected supply for the first half of the year. A fresh mall supply for H1 2012 stood at 2.27 million sq. ft. (msf). Approximately one million sq.ft of expected mall supply was deferred to second half of the year or next year. The overall vacancy rate for the major cities as of H1 2012 stood at 19.6% marginally higher than the previous quarter.

Some prominent high streets across major cities recorded higher increase in rental values as against malls, reflecting the bent of interest amongst retailers for high street properties. Gurgaon and Pune saw increase in high street rents by 7-8 %.

In Pune, while mall rentals remained stable due to sizeable vacancies (overall city average at 25%) in the recently introduced malls, the established high streets of MG Road and JM Road witnessed a q-o-q increase of around 8% due to lack of any space options. Rentals across the other high streets remained stable. Going ahead, the overall mall vacancy rate may is expected to reduce gradually as the overall economy improves with rentals remaining stable . A few established high street locations may witness some rental increases due to lack of spaces, whilst overall the high street rentals too remain stable.

Jaideep Wahi, Director, Retail Services, Cushman & Wakefield commented, "Given the current uncertain economic conditions, the retail markets are showing a largely stable scenario. Whilst high streets still remain in favour with retailers, depending on local market dynamics, demand for mall spaces is stable with retailers emphasizing on the 'quality' of the spaces being offered . Retailers of foreign brands still remain committed to the Indian markets with the recent announcements by multinational retailers indicating the strength of the economy ."

Source: Cushman & Wakefield