On a pan-India basis retail leasing witnessed a 24% YoY growth in the January-June 2023 period, and a 15% increase compared to July-December 2022 period
Bengaluru: Delhi-NCR (North Capital Region) has recorded an increase in retail leasing by 65% YoY (year over year) across investment-grade malls, high streets and standalone developments in January – June 2023, according to real estate consultant CBRE.
As per the report titled ‘India Retail Figures H1 2023’, the total leasing during this period in the region stood at 0.70 million sq. ft. compared to 0.42 million sq. ft. in the corresponding period last year. Delhi-NCR recorded a supply of 0.22 million sq. ft. during January-June 2023.
“The retail leasing market presented notable trends and opportunities in the first half of the year. Retail leasing is expected to touch 5.5 – 6.0 million sq. ft. in 2023, the highest level after the 2019 peak of 6.8 million sq. ft,” said Ram Chandnani, managing director, advisory and transactions services, CBRE India.
“It is expected that primary leasing in newly completed malls would remain the key driver of retail space demand in 2023,” he added.
Among the industry segments, fashion and apparel players drove leasing with a share of about 47%, followed by luxury at 13%, and food and beverage at 8%.
On a pan-India basis retail leasing witnessed a 24% YoY growth in the January-June 2023 period, and a 15% increase compared to July-December 2022 period. Total leasing during January-June 2023 stood at 2.90 million sq. ft. as compared to 2.31 million sq. ft.
Bengaluru, Delhi-NCR, and Ahmedabad collectively accounted for a cumulative share of 65% in leasing activity during the first six months this year.
The January-June 2023 period also recorded a 148% YoY increase in supply. Total supply during the period stood at 1.09 million sq. ft. compared to 0.44 million sq. ft. Further, boosted by the increased appetite of shoppers, the top eight cities saw an 8% growth in mall completions on a half-yearly basis. Ahmedabad led the growth in supply addition with a 73% share, followed by Delhi-NCR at 20%.
“Led by strong demand for quality retail space, rental values increased on a half-yearly basis in select micro-markets across most cities. Additionally, tier-II cities are expected to gain greater traction as retailers recognize the potential of these markets,” added Chandnani.
The launch of Apple stores, along with Pret A Manger, UK based coffee and sandwich chain in Mumbai and Delhi was a key retail landmark.
Canadian coffee brand Tim Hortons which debuted in India last year, strengthened its presence in Delhi-NCR and Punjab and entered the Mumbai market this year. European luxury brand Balenciaga is set to open its first brick-and-mortar store in Delhi-NCR through its partnership with Reliance Brands. Additionally, Galeries Lafayette, a leading shopping centre based in Paris, is also set to establish its presence in India by opening two stores in Mumbai and Delhi-NCR in collaboration with Aditya Birla Fashion and Retail Ltd.
“The leasing performance displayed positive trends on a half-yearly basis as well, exhibiting a 15% rise in space take-up compared to 2.49 million sq. ft. of leasing recorded during H2 2022,” said Anshuman Magazine, chairman – India, South-East Asia, Middle East and Africa, CBRE.
“Going forward, the anticipated growth in mall supply coupled with encouraging consumer spending trends, especially during the festive season, is expected to further augment the sentiment for expansion among both international and domestic retailers who are well positioned in the market,” added Magazine.
The report also highlighted the retail trends that are shaping up in 2023:
Prime assets will continue to gain traction: As per the report, strong flight-to-quality demand will continue to prompt retailers to seek high-quality retail spaces in city centres and along prime high streets. While decentralised properties will also continue to attract interest, CBRE expects assets in prime locations to outperform in 2023. Cost-sensitive retailers are likely to seek opportunities to add new stores in secondary locations.
Experience to remain at the helm of retailer strategies:. Experiential retail has emerged as a compelling response to the prevalent accessibility of e-commerce, offering a strategic avenue for brands to optimize their physical presence and yield substantial returns by prioritizing immersive and engaging in-store experiences.
Retail supply chain optimization to become a new normal: As the final 50 feet remains one of the most expensive legs of the logistics journey, retailers can thus hedge against rising transportation costs by assigning a more active supply chain role to their brick-and-mortar stores. As consumers increasingly expect to be able to shop for any product, any time, retailers will not only look to manage their expectations in-store but also upstream throughout the supply chain.
Retailers will continue to explore tier II, III and IV markets: Population with increased spending potential, smart city recognition by the government, developing infrastructure and airport connectivity, availability of land and successful brand launches in tier II, III and IV markets are some of the factors that are elevating preference for these markets. The surge in online shopping during the pandemic led stakeholders to move operations closer to the end-user markets.
