With over 3.9 million sq ft of Grade A space leased during January-June, Hyderabad had over 52 per cent of the total Grade A space in the country.
Published date – 16 September 2022, 11:27 pm
Hyderabad: Hyderabad is a favorite destination for malls. With over 3.9 million sq ft of Grade A space leased during January-June, Hyderabad had over 52 per cent of the total Grade A space in the country.
While 93 million square feet were leased during January to June this year, around 7.2 million square feet were leased in Hyderabad. The share of Grade B and C malls was 21 per cent (1.57 million sq ft) and 27 per cent (2.02 million sq ft) respectively.
At the country level, Grade A mall space stood at 36 million sq ft or about 39 per cent of the total stock in the first half of the year.
Grade A malls are characterized by high occupancy, strong tenant mix, good location and active mall management. Grade B mall stock has good occupancy and tenant mix. High vacancy rates in Grade C malls, poor tenant mix and relatively poor mall management affected the contribution of Grade C malls.
Out of total 271 operational malls in India, 52 malls are in Grade A, 94 are in Grade B and 125 malls are in Grade C.
“Smaller size and lower grade developments are paving the way for Grade A malls. “The existing Grade A malls have over 95 per cent occupancy, indicating demand for quality real estate in this segment,” says Shishir Baijal, chairman and managing director, Knight Frank India.
In FY 2023, the potential consumption in shopping malls across India is estimated to reach $11 billion. It is expected to grow at a CAGR of 29% to reach $39 billion in 2027-28.
Real estate and investment management company JLL also said Hyderabad will be one of the major contributors to the malls segment along with Delhi, Mumbai, Pune, Bengaluru, Kolkata and Chennai.
The retail sector in the country was under pressure for a long time due to the pandemic. However, from March 2022 onwards, there has been a rapid recovery due to favorable demographics, rapid urbanization and rising consumption, says Rahul Arora, head of India retail business at JLL.
“Investors are looking for quality Grade A assets by established developers and there is marginal vacancy. With the uptick in the retail market, vacancies in better Grade A assets are continuously decreasing,” he further said.
Superior-grade malls are preferred by both consumers and retailers. More than 70 shopping malls with a total retail space of 31.02 million square feet are expected to be operational by 2025 across the top seven cities of India. Delhi NCR and Chennai will contribute 48 percent share. Bengaluru and Hyderabad also have a combined share of 30 percent in the total supply by 2025. Leasing demand in malls is expected to grow through 2023 and surpass pre-pandemic levels.