ICRA: Omicron to lead to 20% decline in mall rentals in Q4FY2022

27 January 2022, Mumbai:

The Omicron-led third COVID wave is likely to negatively affect mall operators’ rentals by 20-25 per cent in Q4FY2022 as against earlier estimates, says ICRA.

Rents during FY2022 are likely to recover to 70 per cent of pre-COVID levels, as compared to earlier estimates of up to 75 per cent recovery.

Majority of store categories are expected to reach near-normalcy by Q1FY2023 as against earlier estimated Q4FY2022, says Anupama Reddy, Sector Head, Corporate Ratings, ICRA.

Decline in footfalls from the first week of January 2022 along with restrictions in major cities such as closing dine-in for restaurants, occupancy restrictions for multiplexes and their closure in few cities along with weekend curfews, is likely to impact rent recoveries for Q4 FY2022 and thereby FY2022.

However, recovery post third wave is expected to be faster than the previous waves with short tenured restrictions and expected quick ramp up for major tenant – multiplexes, adds Reddy.

With estimated rental recoveries over 85 per cent of pre-COVID level, Q3FY2022 was the best quarter for mall operators since onset of the pandemic.

Recovery was driven by pent-up demand, high vaccination coverage, resumption of multiplexes which also coincided with the festive season.

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