Over 55 per cent space of malls in Delhi and the National Capital Region is lying vacant due to the economic slowdown, poor designing and located in unattractive locations, reveals a recent survey by the Associated Chamber of Commerce and Industry of India.
Conducted in shopping malls in main cities between October and December this year, the total rate of vacancy in malls in Delhi-NCR was 55 per cent, while in Mumbai it was 52 per cent, Ahmedabad (51 per cent), Chennai (50 per cent), Hyderabad (48 per cent) and Bangalore (45 per cent).
A few upcoming malls have been significantly delayed and withdrawn due to lukewarm response from retailers.
Vacancy levels have dropped due to poor location, design and parking facilities.
“While some malls are operating at 60 per cent occupancy, others are struggling at less than 20 per cent occupancy. The occupiers are finding it difficult to manage economically. Biggest shopping mall can feel like a pretty lonely place. Majority of retailers said that they are holding back on new store openings and focusing on existing stores,” adds the survey.
Nearly 82 per cent of retailers said they are shutting down some stores in their areas where rentals are too high, with the slowdown in consumption complicating things further.
Nationally, the vacant rates of shopping malls are 55 per cent and will likely to rise to 70 per cent by 2015. More than 90 per cent of shopping in India is still done at unorganised one-off shops, adds the survey.
According to ASSOCHAM Real Estate Committee Co-Chairman Sunil Kumar Dhaiya, the real estate prices and construction costs are rising but the retail business is not growing enough to absorb this. There are just not enough footfalls.
Pointing out that retail rents are down from 60 to 65 per cent in 2010, Mr. Dhaiya said nearly 76 per cent of the shop owners feel that increasing rent will not work because at the end of the day it has to be affordable for retailers to do business.
ASSOCHAM secretary general D. S. Rawat said: “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.”
Rental values of malls remained stagnant across Delhi-NCR, Ahmedabad, Mumbai, Pune, Chennai and Kolkata between October and December. However, certain micro markets in Ludhiana and Indore witnessed a growth over the quarter in the range of 10-15 per cent, he added.
The malaise of high vacant malls can be seen in micro markets such as Ghaziabad, Noida and Gurgaon, where retail has not picked up. “Clubbing this with the fact that spending was really low, the demand for malls is likely to remain dull for the coming next 2013,” said Mr. Rawat.