Malls in India seek government aid during shutdown
Malls in India affected by the coronavirus outbreak are seeking a bailout from the government to compensate for losses incurred during a mandatory shut down period through to March 31.
The decision has affected both retailers and developers in the various states that have implemented the ban on trading during the affected period in a bid to slow the spread of the virus.
“A shut down like this effectively means that there are all kinds of expenses to be borne by everybody; malls may not get rent and would not be able to service loans they have taken for creation of the mall, capital expenditure, etc,” said Retailers Association of India CEO Kumar Rajagopalan in an Economic Times report. “It’s all going to be a big loss. The government needs to look into this and support these entities to save lakhs of jobs”.
A representative body for malls in India is seeking a lending window, a moratorium on loan repayments or to allow banks to reschedule debt, as well as a potential waiver of property tax and electricity charges.
Industry experts have expressed scepticism that footfalls will return to normal within the next few months no matter how brief the shut down period may be, which is likely to impact rental negotiations for retailers, as well as the deferment of new mall openings.
Observers of the situation have commented that any five-day halt to business will erase the month’s profits for retailers.
“Mall operators stand to lose 20 to 25 per cent of their annual revenue assuming that a rent-free period is given to retailers,” read an ICICI Securities report. “In our view, the most likely scenario is that mall operators and retailers may share the losses given that malls have now become a relationship-based business with the same retailer having presence across malls.”