Retailers prefer bigger shopping malls: Survey

NEW DELHI: Global and domestic retailers seem to prefer bigger shopping malls to set up shop, with more than 40% of the respondents favouring malls of 350,000 sq ft and above, according to a survey by property consultancy CBRE.

“This allows them to gain access to a more varied retail environment ranging from supermarkets, cinemas, kids entertainment zones -thereby attracting greater footfalls,” said the report named India Retailer Sentiment Survey. Real estate cost, quality of shopping mall and incentives or rent-free period emerged as the top factors to influence the store location by retailers. Suitable store size or floor and right micro-market were among the other challenging factors for selecting the store location.

Occupation cost, size of mall and catchment area or location emerged as the top three factors impacting location selection in terms of malls. While, ease of access or parking, location and external ambience were the top factors impacting location selection in terms of high streets. The National Capital Region, comprising Delhi, Gurgaon, Noida, followed by Mumbai continued to serve as gateway cities, featuring at the top of retailer expansion plans due to their high levels of brand consciousness and consumer purchasing power.

“A point to note is that fashion and apparel retailers in particular are able to generate higher sales in the ‘all-season cities’ of NCR as compared to other cities, further contributing to their popularity,” said the report. While the residential real estate segment continue to grapple with slow sales and rising inventory, office and retail segments are showing a strong growth. Private equity investment in retail real estate surged to Rs 3,350 crore in the first half of 2016, the highest since 2008, according to Cushman & Wakefield.

Also with the government clearing tax hurdles for real estate investment trusts (REITs), retail assets are increasingly witnessing rise in demand as it can also listed under a REIT portfolio. New malls also registered the highest half yearly supply in five years at 4.8 million sq ft in H1 2016, against just 0.2 msf in H1 2015. NCR accounted for the highest supply during H1 2016, grabbing 64% of the share in new supply during the first half of 2016, followed by Pune and Mumbai.

Credits ET Realty

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