Over 50% mall supply in top 8 cities deferred in 2012: Cushman & Wakefield

MUMBAI: The top eight cities in India witnessed 4.8 million sq ft or 58% of total expected mall space supply deferred in 2012, said property consultant Cushman & Wakefield. During the year, total mall space supply stood at 3.44 million sq ft.

The highest deferment of supply was recorded in Mumbai and Hyderabad where none of the planned supply entered the market, followed by Chennai with 87% and National Capital Region with 75% supply deferred.

Given that the actual demand resulting from announcement of FDI in retail would take 12- 18 months to start manifesting, many developers with initial plans for retail have pushed their projects for next year thus widening the gap between expected to actual mall supply for the year, said Jaideep Wahi, Director, Retail Agency, Cushman & Wakefield India.

Wahi expects around 12 million sq ft new mall space in 2013 with mix of deferred spaces as well as new projects.

During the year, total 10 new malls started operations with Bangalore witnessing the highest mall supply of 1.86 million sq ft. Rentals for retail space grew 20% - 60% in select micro markets in 2012, Cushman & Wakefield said in a report.

Mumbai saw the highest average increase in high streets rentals of approximately 16% year on year which was closely followed 14% in Kolkata. The high street of Vittal Mallya Road in Bangalore experienced maximum rise of approximately 58% in rentals closely followed by Colaba Causeway around 56% in Mumbai. Khan market remained the most expensive retail location with rental values at Rs 1,250 per sq ft and registered a rise of approximately 4% over last year.

Average mall vacancy across these cities stood at 20%, a decline of 1% over last year, partly aided by the large deferment of malls, the report said.

Ahmedabad witnessed the sharpest drop of 7% in mall vacancy levels even while it recorded the highest vacancy levels in 2012. Hyderabad, Mumbai and NCR witnessed marginal improvements of 1-2% each on account of increased leasing activities. Bangalore and Chennai witnessed approximately 2% rise in mall vacancies owing to influx of new mall space and a general non availability of quality mall spaces in these cities, the report said.