Mall sales in top 8 cities to hit $39 billion by FY28: Knight Frank

Organized retail volume in India’s eight major cities is expected to grow at a compound annual growth rate (CAGR) of 17% from $52 billion in FY22 to $136 billion in FY28 , according to a report by Knight Frank India.

The eight cities include Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, the National Capital Region (NCR) and Pune.

Over the same period, potential retail sales in Indian malls are expected to grow at a CAGR of 29% during FY22-28 to reach $39 billion by FY28.

India’s malls in these cities grew at a CAGR of around 3% to $8 billion in FY22, with consumption estimated to exceed pre-Covid-19 levels in FY22. exercise 23.

The high revenue growth was widely forecast due to increased shopping center supply over the next six years and continued growing consumer demand.

In the top eight cities in the first half of 2022, total shopping center inventory (leasable area) is estimated at 92.9 million gross square feet, with 271 shopping centers operating. In the second half of 2019, it amounted to 77.4 million square feet distributed in 255 shopping centers. In the first half of 2022, NCR contributed the most with 34%, followed by Mumbai at 18% and Bangalore with 17%, according to the report.

Sharing an insight into India’s ‘mall culture’, Shishir Baijal, President and Managing Director of Knight Frank India, said: “The commercial property industry has reached a new level of maturity where smaller developments Substandard size and quality give way to Grade A mall. Existing Class A malls are over 95% occupancy, a sign of the demand for quality real estate in this segment. Like the office segment, after consolidation, commercial real estate will also provide an excellent opportunity for investments, including REITs, in the future, he added.

CBRE also expects commercial leasing to increase. Anshuman Magazine, President and CEO of CBRE, India, Southeast Asia, Middle East and Africa, said, “We expect commercial leasing to hit 6-6.5 million square feet in 2022, double of the quantum of 2021.” The first half of 2022 saw a 166% year-over-year increase in retail leasing activity to 1.5 million square feet, representing a nearly 85% share of overall property completions. investment-grade malls, he added.

He also said experiential retail is currently counterbalancing the prevalence of e-commerce and driving profitability by increasing physical brand presence.

“We expect these positive sentiments to continue in the near term, even as retailers explore innovative ways to engage consumers and drive sales on both offline and online fronts.”


Resumption of consumption

The eastern and northern regions of India have witnessed a strong recovery in consumption reaching new highs by breaking through pre-pandemic levels in March 2022. According to the latest findings, the eastern region has recorded a increase from 100 in March 2019 to 123 in index value at the end of March 2022. In the north, it rose to 118 during this period. The southern region recorded steady improvement with an index value of 108 while the western region was the most affected with an index value of 99.

According to the analysis of the first 2022, the distribution of retailer categories in malls presents a similar picture compared to the pre-Covid era. Clothing and accessories have expanded their footprint. Clothing fell from 26% to 29% and accessories fell from 8% to 12% in malls, according to the report.

The beauty, footwear, and entertainment categories also saw marginal growth in category breakdown over the same period.

The other categories which include gyms and other miscellaneous categories were the most affected and saw a gradual decrease from 21% pre-Covid to 12% post-Covid.

After the Covid-19 pandemic, retailers are keen to grab the space and launch new stores as the consumption recovery is 110-115% while footfall is around 70-80% of normal levels. before Covid-19 in March 2022.


Ghost malls

According to the Knight Frank research survey, up to 21% or 57 malls across India’s eight major cities are currently in 20 different stages of disrepair. These 57 shopping centers represent nearly 8.4 million square feet of gross leasable area. The survey indicates that NCR occupies 3.35 million square feet of ghost mall space, followed by Bengaluru with 1.38 million square feet of ghost mall space.

Shubhranshu Pani, founder of property advisory firm Treta Advisory, said: “The number of ghost malls is increasing due to the disparity between office rentals and retail rentals. These non-functional malls can be used alternatively as offices, hotels, consumer-centric coworking spaces, educational institutes. »

Pani explained that many places were built without understanding the match between demand and supply. Within a radius of two kilometers there are 11 multiplexes, they cannot support.

“There’s a lot more to malls than bricks and mortar,” Baijal said when asked about future innovations. This asset class needs more experts not only in terms of design, but to manage them effectively, they need to invest time and energy to ensure a safe and hygienic experience and give consumers the confidence to come back. , he added.

Edwin S. Wolfe