Delhi and its neighboring regions witnessed 24% vacancy in its mall space in 2008, the annual retail report issued by international real estate consultant Cushman & Wakefield has indicated. The mall rentals in Delhi also showed a proportionate decline in the range of 12-22%, the report said. Vacancy levels in Pune malls were also high at 15%.
However, the significance of the drop in occupancy levels in Delhi’s NCR region was partially offset by 12% increase in mall capacities during the year. Pune had no consolation as it witnessed 67% decrease in mall supply in 2008 as compared to the previous year.
The report indicates that as much as 11 million square feet of expected mall supply in the year 2008 was deferred to the future, which is a shortfall of 54% from the projections made at the beginning of the year. Of the proposed 74 malls at the beginning of Q1 2008, only about 34 were delivered through the year 2008. At 9.7 million square feet NCR witnessed the largest share of this supply, it noted.
Rajneesh Mahajan, director of retail services at Cushman & Wakefield said, “From the projected supply of 20.8 million square feet space in Q1 2008, we will see a spill over of about 10 million square feet development in 2009/ 2010. Lack of funds leading to construction delays and cautious expansion by retailers has resulted in slow absorption of retail space in malls.”
With an apparent softening of demand, Hyderabad witnessed the least mall space at only 10% of the initial projections, followed by Pune (20%), Chennai (22%), Bangalore (27%) and Kolkata (36%). NCR and Mumbai, however, received a relatively higher share of the projections with 67% and 47%, respectively.
However, owing to the shortfall in mall supply in 2008, the vacancy rates have remained at a national average of 9%.
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