Galleria third most expensive retail rental space
Best exemplifying Millennium City’s young and restless spirit, Galleria Market has been placed third among India’s most expensive retail rental spaces, after the more famous Khan Market in Delhi and Linking Road in Mumbai, in a recent real estate study by international property consultant Cushman and Wakefield Private Limited. And this is not its first time in India’s envy list; the retail market has been among the costliest retail rental spaces for quite a few years now, while maintaining a steady growth rate of around 9% year-on-year (YOY).
However, just under the bright light of Galleria’s high street market, is a looming shadow. As it has grown, across the city the only type of retail space that has mushroomed is the mall. And they are now gathering dust.
“Gurgaon doesn’t have proper high streets. Galleria is the closest thing to a high street market in the city, with a catchment populated by affluent people. This makes it a preferred retail destination that has maintained steady growth in rentals over the years,” said Siddhart Goel, senior director (research services), Cushman and Wakefield.
The average rentals for the retail hub are around Rs 875 per sq ft, which has seen a growth of 9.4% YOY according to the study. “The selling rate at Galleria is a high Rs 1 lakh per sq ft. Recently, a 200 sq ft shop was sold for Rs 2 crore, which says a lot about the demand for quality high street retail space,” said Praveen Jain, vice-chairman, NAREDCO.
Despite high demand for space, Galleria’s high rental makes it unviable for many retailers, especially of fashion. “At current rates, a fashion brand can’t sustain in Galleria. It’s dominated mostly by food and beverages (F&B) brands that fetch higher margins, and is typical of Gurgaon’s many neighbourhood micro-markets,” said Manish Sapra, senior director (retail), Adidas India. The lack of quality space for international brands is a problem across India, said Sapra. In Gurgaon, this is made worse by inadequate supply of standalone retail spaces, and a misplaced business model that has focussed entirely on malls.
According to several people, Ambience is the city’s only mall with quality, organised retail space. “In terms of organised retail, Ambience mall stands alone. The demand though is ever-increasing, due to the growing affluent and cosmopolitan customer base with high disposable incomes,” said Pankaj Renjhen, managing director (retail services), JLL India.
Once known as India’s mall capital, the city has struggled with the reputation. “There are only a few developers who have got the mall model right. Consequently, most malls end up as failed projects. It’s necessary for developers to reinvent their business model,” said Goel.
A common feature of successful malls is that they serve as a destination, rather than just a shopping centre. “Gurgaon needs more destination malls where one can eat, shop, watch a movie and have an overall experience,” said Sapra.
According to data from Cushman and Wakefield, there hasn’t been any new malls being developed of late. The last addition was in the fourth quarter of 2011. Average malls rentals are around Rs 375 per sq ft. The demand for quality retail space is ever increasing. “In recent times, Gurgaon’s retail market has seen immense development, both in terms of infrastructure and cosmopolitan lifestyle. New Gurgaon requires retail space, but lacks better planning and well-developed structures that can be a ‘One Stop Destination’ for consumers of all age groups to get all their lifestyle and daily needs,” said Vineet Jain, CEO, NCR, Future Group.