Rental leasing on overdrive in select Indian cities
03 November 2023, Mumbai
The pan-India retail segment has seen 46 percent year-on-year growth from January to September 2023, especially in eight cities spread out over 4.73 million sq. ft., as compared to 3.23 million sq. ft. in the same period last year.
The current demand surge in rental leasing across premium retail spaces is due to rapid urbanization, rising disposable income, and the popularity of offline retail, along with government and private investments in retail infrastructure.
Report
As per ‘India Market Monitor Q3 2023’ by CBRE, a leading commercial real estate services company, there was almost 24 per cent increase in retail leasing year-on-year in the first half of 2023 compared to a nominal per cent growth in the same period of 2022.
The total growth from January to September 2023 was up 34 per cent in the fashion and apparel segment’s rental leasing, followed by home furnishing and department stores at 17 per cent and food and beverage at 13 percent.
Bengaluru, Delhi-NCR and Pune lead the real estate boom
The bestsellers in the real estate market were Bengaluru, Delhi-NCR, and Pune, which collectively accounted for over 61 percent of the share across various kinds of leasing activities. While Pune led quick growth with supply additions of 58 percent, followed by Delhi-NCR at 19 percent, some other of the top eight cities saw almost 100 percent YoY growth in the completion of malls and shopping centers.
The Delhi area has consistently witnessed an increase in retail, especially as the capital city hosted the recent G20.
Multi-data point
The lion’s share of leasing activity is led by domestic firms with around 68 percent, followed by retailers from Europe, the Middle East, and Africa (EMEA) at 22 percent, Asia-Pacific (APAC) at 8 percent, and America at 3 percent. While Delhi-NCR, Chennai, and Pune have led leasing activity in the fashion and apparel category, it is home furnishing category store leasing that has been the highest in Pune, Ahmedabad, and Mumbai.
Bengaluru recorded the highest leasing share of 30 percent, followed by Delhi-NCR at 19 percent, Pune at 12 percent, and Chennai at 11 percent.
Focus on malls as entertainment centres
With malls having transformed into busy entertainment centers with restaurants, Cineplex's, and amusement areas that go far beyond just retail, more spaces are needed for bigger and better structures to enhance footfalls.
Going steady
Leasing in the retail sector is expected to remain strong in the post-Covid years, and primary leasing is increasing in momentum both in the metros and the Tier II cities as more brand retailers seize the opportunity and the potential for growth while managing operational costs.
With developers now focusing on launching high-street retail projects not just in commercial areas but also in residential sectors and other untapped locations where the aspirational middle classes strive for better living standards, this is currently helping the retail boom to spread across pan-India.
