Tomorrow once again for malls: As purchases reach pre-Covid levels, rents going up
With consumers returning to stores and retailers doing decent business, mall owners are now signing leases on higher rentals. In fact, space in malls seems to be in short supply as retailers look for bigger showrooms. Occupancy levels are visible with most malls reporting levels of 96-98%. Although the number of people has not yet fallen to pre-pandemic levels, consumption is well above 2019 levels.
DLFFor example, is able to sign new leases at 20-25% higher rent than last year. Pushpa Bector, Executive Director, DLF Retail told FE that the business outlook was promising. “We are expecting another 10 per cent hike in fares from October as the festive season begins,” Bector said.
Shishir Srivastava, Managing Director, Phoenix Mills, said it was seeing an increase in fares in the current year as compared to FY 2012 with minimum guaranteed fares of 11-12%. “In addition, we will also see a higher percentage of revenue share from the same brand category,” Srivastava said.
Phoenix Mills’ collection in April was a strong Rs 170 crore. Srivastava told analysts that at Rs 251 crore, retail rental income had grown 15% year-on-year in the March quarter and had returned to pre-Covid levels.
Mall operators noticed that pre-pandemic levels were yet to be reached. However, consumption, he said, has increased significantly since March and is above 2019 levels.
Rajnish Mahajan, CEO, Inorbit Malls India, said per capita spending has gone up as buyers are upgrading purchases. Mahajan attributes this to the higher disposable income of customers who have saved on travel expenses during the pandemic. “Even with fewer people, we are getting better sales because people are spending more on premium and branded products,” he said.
However, mall owners are confident that the number of customers will increase in the coming months as the fear of infection among consumers is less and the festive season has started. “The demand for retail space is good and we have a waiting list for our properties. All categories are now focusing on big experimental stores, be it athleisure, luxury, food and beverage, international brands or electronics. With the wedding season beginning in October, she expects struggling Indian designers and ethnic wear shops to do well.
According to CBRE, Grade A malls and high streets in the top six cities of the country grew by almost 40% in January-March from 0.5 million sq ft. In addition, investment-grade malls supplied 0.6 million sq ft during the March quarter, a four-fold jump year-on-year.