India’s Retail Sector : Delhi NCR

 by JLL India..!

With vacancy rates in performing malls in single digits & retailers favouring expansion in projects offering optimal value, leasing activity was sluggish across the Delhi-NCR (National Capital Region) retail market in 2Q 2012.

Retailers are also pre-committing to space in upcoming retail projects that offer a good location, design, branding & business potential. Demand originated primarily from clothing &  accessories brands, food and beverage retailers, and electronic equipment vendors.

Absorption volumes saw a 69 per cent drop from the previous quarter, with net take-up at 1,70,985 square fet, of which two thirds was in select existing projects in the Suburbs sub-market.

Overall, vacancy rates dropped to 24.7 per cent, a 0.60% drop q-o-q. With existing stock in the Prime South sub-market constrained by low vacancy rates, notable leases included those by Roberto Cavalli and Van Laack, which leased 3,000 square feet and 1,500 square feet respectively, in Emporio; Dunkin’ Donuts, which opened its first store in India, leasing

1,000 square feet in DLF Courtyard in Saket; and Mamagoto, a Japanese restaurant, which leased 3,000 sq ft in DLF Promenade in Vasant Kunj. Leases in the Prime Others sub-market included Haldiram’s take-up of 6,000 square feet in Pacific Mall, Subhash Nagar, as well as

numerous other leases.

Notable leases in the Suburbs sub-market were Reliance Digital’s lease of 25,000 square feet in Raheja Mall, Lemp Brew & Kitchen’s lease of 10,292 square feet in DLF Star Mall and Fabindia’s

lease of 8,500 square feet in MGF Plaza, all in the Gurgaon precinct.

New supply was limited to one completion in the Prime Others submarket, with the retail component on the Delhi Metro Airport Express - Shivaji Stadium transit point (60,310 square feet) becoming operational at 35 to 40 per cent occupancy.

Overall, rents remained stagnant as retailers resisted increases and large retailers enjoyed having an upper hand in commercial negotiations. Capital values showed a slight increase in the Prime South sub-market but remained stagnant in other sub-markets.

Overall, capital values showed a q-o-q increase of less than 1 per cent, while yields compressed by 0.1% for the first time in nine quarters.

On-going government discussions about FDI in multi-brand retailing may lead to some positive developments that are expected to spur the entry of large-format global retailers. Malls that are forecast to become operational will see leasing activity based selectively on location and

demographic profile. The Prime South sub-market will continue to see interest from retailers and an active churn in existing stock may push rents up. Select upcoming developments in the Prime Others & Suburbs sub-markets are expected to generate healthy demand based on current pre-commitment levels.

Supply rationalisation may result in an easing of the downward pressure on rents, although rental growth is forecast to remain range-bound.

Delhi is India’s political & administrative capital, and is also the country’s second-largest metropolitan city. With a mixed population of the traditional wealthy and the middle class combined with the upwardly mobile employed across various industries, there are healthy residential catchment areas for luxury as well as specialty and mass retailing formats.

With healthy population levels across the Prime City sub-markets & well-settled areas in the surrounding locations, organised retail formats have flourished over the past decade.

Suburban cities look set to see a larger share of future retail developments as they become home to an increasingly large population that will fuel demand for these

formats across multiple locations in the suburbs

Jones Lang LaSalle Asia Pacific

For more details, contact,

Ashutosh Limaye, Head, Research and REIS

ashutosh.limaye@ap.jll.com

+91 98211 07054

Jones Lang LaSalle Retail contacts in India

Shubhranshu Pani

shubhranshu.pani@ap.jll.com, +91 98205 19899

Pankaj Renjhen

pankaj.renjhen@ap.jll.com, +91 98992 18885

Authors..!

Subash Chandra Bhola

Assistant Vice President, Research and REIS

subash.bhola@ap.jll.com, +91 22 3985 2311

Karan Khetan

Senior Analyst, Research and REIS

karan.khetan@ap.jll.com, + 91 22 3985 1313

Src: JLL India's India’s Retail Sector Undergone Rapid Transformation Report

Share: