Retail leasing activity to gain traction in H2 2022

Hyderabad: Retail leasing in the malls of Hyderabad gain strength in H1 2022 with a retail absorption of around 0.24 million sft, led by domestic brands and the retail space supply in the city stood at 0.37 million sft during H1 2022, reveals CBRE South Asia Pvt Ltd, in its latest retail report.

According to the report, the pent-up supply is likely to enter the market during H2 2022, as 5.5 to 6 million sft of new investment-grade malls are anticipated to become operational during the year, registering a 40 per cent growth Y-o-Y, surpassing the pre-pandemic levels.

According to the report, 'CBRE India Retail Figures H1 2022', among the key retail categories, leasing was mainly driven by fashion and apparel brands with a 35 per cent share in total absorption, followed by entertainment (34 per cent) and consumer electronics (10 per cent).

Coming to the key transaction ecorded during H1 2022 in Hyderabad were INOX, where it leased 50,000 sft in Necklace Pride Mall, Moviemax leased 25,000 sft in high street in Eastern Hyderabad and Decathlon leased 20,000 sft in Necklace Pride Mall. Retail players from fashion-apparel and food-beverage categories have also set up their new stores in Kukatpally and Madhapur locations in Western Hyderabad.

Anshuman Magazine, Chairman and CEO (India, South-East Asia, Middle East and Africa), CBRE said, "It is evident that retailers have regained confidence and are set for expansion mode. We anticipate that going forward, domestic brands will remain proactive in relocations/expansions, and a strong appetite from international retailers will continue. We foresee retail leasing to touch 6 to 6.5 million sft in 2022, twice the 2021 quantum. Additionally, owing to the tremendous growth potential, we expect many international brands to launch stores in tier II and III markets." Ram Chandnani, MD (Advisory and Transactions Services), CBRE India said, "Accounting for nearly 85 per cent share in the overall investment-grade mall completions, Hyderabad, Delhi-NCR, and Bangalore are expected to dominate retail supply addition in H2."

The report indicates that the retail sector leasing in India increased by about 166 per cent year on year (Y-o-Y) crossing 1.5 million sft. As of H1 2022, the total investment grade mall stock crossed over 77 million sft. The report points out that among the cities, Delhi-NCR and Pune, followed by Bangalore and Hyderabad, led the leasing activity, together accounting for more than 70 per cent of the overall retail space take-up.

Thematic stores, promotional events, and expanded display areas and showrooms are expected to grow in 2022. Retailers will continue to rely heavily on omni channel strategies to sell and deliver goods. The report also observed that due to strong demand from retailers across investment grade malls and prominent high streets, rental values increased on a half-yearly basis in select micro-markets across most cities.

Among high streets, rents rose by about five to 12 per cent across select locations in Delhi-NCR, Bangalore, Hyderabad, and Pune, and about one to three per cent in Mumbai. While prominent mall clusters in Pune and Delhi-NCR witnessed rental growth of five to 11 per cent on a half-yearly basis, a marginal increase of one to three per cent was reported across one small cluster in Mumbai.