A recent survey by Associated Chamber of Commerce and Industry of India (ASSOCHAM) shows vacancy rates are growing in Indian shopping malls.
According to the survey, Delhi-NCR has the highest mall vacancy rate at 55 per cent, followed by Mumbai at 52 per cent, Ahmedabad at 51 per cent, Chennai at 50 per cent, Hyderabad at 48 per cent and Bangalore at 45 per cent. The position in the nearby town of these locations is much disturbing, adds the survey.
ASSOCHAM says the higher vacancies are partly due to economic slowdown, poor mall designs, lack of robust revenue generation models and poor locations.
“Big shopping malls can feel like a pretty lonely place,” said the survey. “A majority of retailers said that they are holding back on new store openings and focusing on existing stores.”
Nearly 82 per cent of the retailers polled said they are shutting down stores in areas where rentals are too high, and with the slowdown in consumption complicating things further, point out the survey.
Nationally, the vacancy rates of shopping malls is 55 per cent and will likely rise to 70 per cent by 2015, according to the ASSOCHAM analysis.
More than 90 per cent of shopping in India is still done at unorganised one-off shops.
Sunil Kumar Dhaiya, co-chairperson of ASSOCHAM Real Estate committee, said that the real estate prices and construction costs are rising but the retail business is not growing enough to absorb this.
Nearly 76 per cent of the shop owners said that increasing rents will not work because at the end of the day it has to be affordable for retailers to do business and the fate of the retail realty segment is intertwined with the retail industry.
The retail sector is forecast to grow rapidly, but mall rentals and valuations are not rising in of most markets, said Rawat.
There are approximately 1200 shopping malls in India, the growth in the retail sector has driven a mall building boom across the country, with the total number of malls expected to increase to 1500 by 2015, according to the report.
The survey adds demand for mall space across most micro markets remained slow because of lack of fresh supply, conservative approaches from retailers and overall slowdown in consumer demand.
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