Retail space demand in malls may rise 81% this year: JLL
The net demand for retail space in shopping malls is expected to rise 81 per cent this year, driven by strong economic trends and higher purchasing power of young population, a JLL India report said. According to the property consultant’s latest estimates, supply may increase 39 per cent during calendar year 2018 in seven major cities — Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Pune and Hyderabad.
The net leasing of retail space in malls is estimated to rise at 5.8 million sq ft in seven cities during 2018 from 3.2 million sq ft last year, the report said. Supply of retail space is likely to increase to 7.8 million sq ft in 2018 from 5.6 million sq ft last year, it added.
“The retail sector of India is going through a fresh period of growth which is backed by strong economic fundamentals,” JLL India CEO and Country Head Ramesh Nair said. There has been an increase in interest from investors which was seen with investments of over USD 750 million in 2017, he added.
“Encouraged by urbanisation, young population and rising proportion of nuclear families in urban locations, over 70 per cent of consumption growth in the next 15 years is expected from population aged 15-59 years, with increased per capita consumption. This, along with the opening up of the FDI route for retail brands entering into India, will further boost retail investments,” he said.
During 2018-20, JLL India has pegged supply of retail space in malls at 19.4 million sq ft, while demand will be about 15 million sq ft.
The consultant expects a parallel rationalisation of existing mall spaces which will help the market avoid an oversupply situation.
“As a natural course of events, we can expect a few malls to close down or temporarily suspend their operations for repairs, renovation and upgrades. This will help the market create the necessary balance to maintain the rental values,” the report said.