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    Malls look to create more quality space to meet rising demand

    Synopsis

    Leading malls said they have planned to start big development and construction activity so that quality retail space can come in the next 3-4 years. As retail industry bounced back post covid, brands started finding it difficult to lease space. While realty major DLF is looking to add around 5 million sq ft (msf) in the next 5-6 years with an investment of about ₹3,000 crore, Phoenix's mall portfolio is expected to increase to 14 msf by FY27 from 9 msf as of March 2023.

    Mall_of_india_DLF
    Top mall operators are embarking on a development and construction activity, to cater to an expected increase in demand from brands that have already started finding it difficult to lease space amid a bounce back in the retail industry.

    The new retail space they are adding is expected to come on stream in the next three to six years, executives said.

    While realty major DLF is looking to add around 5 million sq ft in the next five-six years with an investment of about Rs 3,000 crore, Phoenix’s mall portfolio is expected to increase to 14 million sq ft by FY27 from 9 million sq ft now.

    Lulu expects to double its portfolio as it has plans to open malls in Noida, Greater Noida, Ahmedabad, Chennai and Hyderabad. Mumbai’s Inorbit, meanwhile, plans to expand to Hyderabad and Visakhapatnam.

    “Given the recovery across the retail segment and consumption trends in our country, we have also initiated development of the next line of retail destinations across multiple geographies,” DLF chairman Rajiv Singh said in the company’s annual report.

    The company has plans to build malls in Gurgaon and Goa and high streets in Gurgaon, in addition to retail spaces in its upcoming residential and commercial developments. Construction of most of these will start this year.

    Phoenix is planning to deliver at least 1 million sq ft of retail space every year and is evaluating nine markets in India to enter with its properties.

    As of March 2023, Phoenix has 11 operational malls, including the recently completed Phoenix Citadel in Indore and Phoenix Palladium in Ahmedabad. With three more malls (Pune, Bengaluru and Kolkata) under construction, its leasable area is expected to increase to 13 million sq ft by FY25. The company in December last year acquired a plot for developing a 1-million-sq-ft mall in Surat by FY27.

    As organised retail expands to more markets, shopping malls are likely to benefit the most.

    Unity group, which operates multiple malls in Delhi, has planned mall developments in Preet Vihar, Mangolpuri, Rohini and Punjabi Bagh in the national capital, and Mohali in Punjab.

    Some tier-2 developers like Sushma and Bhumika are also planning malls, in cities such as Jaipur, Udaipur and Chandigarh.

    According to an analysis by Cushman & Wakefield, India’s top three cities will need to add 9 million sq ft of retail space every year till 2027, to match the retail space per capita of a country like Vietnam.

    Currently, India adds about 3.8 million sq ft every year, with developers mostly focusing on office and residential assets. Experts feel it is time now to create Grade-A retail spaces as international brands are betting big on India.

    “We are looking for newer cities as retail space is in demand. While metro cities are attracting most of the brands, they are willing to go to smaller cities provided they get the right space,” said Rajneesh Mahajan, chief executive of Inorbit Malls.

    Shibu Philips, director-shopping malls, Lulu Group India, said the company will add about 7 million sq ft across India in near term and is actively looking for land.

    “We currently operate about 7.2 msf and the upcoming development will include hypermarket and mini malls,” Philips said.

    “Our malls are coming up in Hyderabad in Kukatpally which we're planning to open by mid of next financial year, then we are opening 5 malls in Kerala. We are currently looking forward to expand in markets like Bangalore and looking to open malls in Ahmedabad, Chennai and other northern cities, including Noida and other cities of UP too,” Philips said.

    Covid-19 had severely impacted the economy, with bricks-and-mortar retail stores in malls and high streets among the hardest hit. This had forced mall operators to pause new developments, but a faster-than-expected recovery in the sector has encouraged them to now speed up the activity.

    According to an Anarock report, the top seven Indian cities will add nearly 11 million square feet of mall space — the size of more than 145 football fields — in 2023.

    In 2022, the top seven cities added more than 2.6 million sq ft of mall space, which was 27% more than the preceding year.


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