Delhi-NCR and Pune, followed by Bangalore and Hyderabad, led the leasing activity, together accounting for more than 70% of the overall retail space take-up. As per the report, pent-up supply is likely to enter the market during H2 2022, and the total supply for the year is anticipated to surpass the pre-pandemic levels.
Fashion and apparel retailers continued to drive the leasing activity with a share of 32% in H1 2022. Other prominent categories that led the leasing activity during H1 2022 included supermarkets (12%) along with homeware and department stores (12%). The entertainment category, which was impacted the most during the pandemic, has also emerged as one of the top demand drivers during H1 2022, with an 11% share in the overall demand. Leasing momentum is expected to pick up in H2 2022 owing to the anticipated space take-up in newly completed malls.
Due to strong demand from retailers across investment grade malls and prominent high streets, rental values increased on a half-yearly basis in select micro-markets across most cities. Among high streets, rents rose by about 5-12% across select locations in Delhi-NCR, Bangalore, Hyderabad, and Pune, and about 1-3% in Mumbai. While prominent mall clusters in Pune and Delhi-NCR witnessed rental growth of 5-11% on a half-yearly basis, a marginal increase of 1-3% was reported across one mall cluster in Mumbai.
THE RETAIL OUTLOOK
- Expansionary demand set to strengthen leasing: Domestic brands are likely to remain proactive in relocations and expansions. Among international retailers, brands with sound local market intelligence and established management teams are anticipated to drive leasing activity. On the other hand, new-to-market brands are likely to remain cautious and collaborate with domestic partners to launch in India.
- Pent-up Supply addition expected in H2 2022: Pent-up supply is expected to come on stream during H2 2022 as 5.5 - 6.0 million sq. ft. of new investment-grade malls are anticipated to become operational during the year, registering a 40% growth Y-o-Y.
- Experiential retail to remain In-Focus: Thematic stores, promotional events, and expanded display areas and showrooms are expected to grow in 2022, and retailers will continue to create engaging, immersive, and convenient experiences for customers.
- Innovation in tenant mix: The last two years have resulted in a rise in demand for service-oriented retailers, including beauty, medical, pet, childcare, and entertainment. Landlords are anticipated to place much greater importance on this sector in their tenant mix and, in doing so, could redefine ‘consumer spaces’.
- Omnichannel to remain relevant in times to come: Retailers will continue to rely heavily on omni-channel strategies to sell and deliver goods. Some may generate most of their revenue online but leverage a select number of brick-and-mortar showrooms. On the other hand, a mall-based retailer that derives most of its revenue from store sales may use online/social media channels to market and sell goods.
- Retail partnerships to foster: Retailers continue to explore new business models and concepts, including fostering new partnerships and relationships, not only with landlords but also with international players to facilitate their seamless entry into India.
- Delhi-NCR Leasing back to pre-pandemic levels; led by domestic brands.
- Key retail categories included Supermarket (23%), Homeware and Department Store (17%) and Fashion & Apparel (15%).
- Bangalore Retail leasing led by newly operational malls.
- Key retail categories included Fashion & Apparel (31%), Entertainment (29%) and Consumer Electronics (21%).
- Mumbai Retail leasing strengthened; led by EMEA-based and domestic brands.
- Key retail categories included Homeware and Department Store (55%), Food & Beverages (18%) and Fashion & Apparel (11%).
- Hyderabad Retail leasing improved in malls; led by domestic brands.
- Key retail categories included Fashion & Apparel (35%), Entertainment (34%) and Consumer Electronics (10%).
- Chennai Retail leasing improved; led by high streets.
- Key retail categories included Fashion & Apparel (25%), Homeware and Department Store (21%) and Supermarket (16%).
- Pune Demand strengthened; expansion led leasing by apparel and fashion brands.
- Key retail categories included Fashion & Apparel (63%), Supermarket (17%) and Food & Beverage (8%).
- Kolkata Retail leasing improved.
- Key retail categories included Sports goods (40%), Fashion & Apparel (20%) and Supermarket (18%).
- Ahmedabad Leasing mainly driven by consumer electronics’ players.
- Key retail categories included Consumer Electronics (70%), Health & Personal Care (12%) and Fashion & Apparel (10%).