dtz property times india retail q4 2012

7/29/2019 DTZ Property Times India Retail Q4 2012

1/15

Property Times

India Retail Q4 2012

Prevailing optimism in market

DTZ Research

16 January 2013

Contents

Economic overview 2

Retail sector overview 3

Delhi NCR 5

Mumbai 6

Bengaluru 7

Chennai 8

Pune 9

Kolkata 10

Hyderabad 11

Definitions 12

Abbreviations 13

Authors

Rohit KumarHead of India Research

+91 124 459 7500

[email protected]

Divya Badola

Manager Research

+91 124 459 7500

[email protected]

The retail real estate markets in Q4 can be characterized by buoyant demandcoupled with no new supply. Recent policy reforms and long term positive

outlook for retail sector in the country has resulted in renewal of expansion

plans by retailers, both Indian as well as international.

With no new mall getting operational during Q4 2012, the overall retail stockacross the seven major cities remained unchanged. Throughout 2012,

approximately 3.3 million sq ft of retail mall space was added, representing a

reduction of 62% when compared with the increase in 2011. Bengaluru

accounted for 48% of total new supply, followed by Mumbai (17%) and Pune

(12%).

The overall vacancy level in Q4 across the seven major cities was recorded atapproximately 11% of the total retail mall stock. While q-o-q vacancy levels in

Bengaluru and Mumbai reduced marginally due to buoyant demand and lack

of new supply, availability levels in Delhi NCR increased during Q4. This can be

attributed to retailers shutting a few low performing stores along peripheral

locations of the city.

With the exception of Mumbai, overall mall rents remained unchanged acrossmajor cities over Q4. However as compared to 2011, Hyderabad witnessed

highest growth in mall rental values (14%), followed by Delhi NCR (11%). Rentappreciation across other cities was in the range of 3% to 5% with an exception

of Kolkata, where rental movement largely remained unchanged during the

year.

The overall positive outlook witnessed in second half of 2012 is expected toprevail in 2013, resulting in improvement in demand from retailers. This

coupled with restrained mall supply across most cities is likely to bring an

upward movement in rental values. Additionally, allowing Foreign Direct

Investment (FDI) in multi brand retail is expected to result in an increase in

enquiries from international brands. However, actual entry of such players in

Indian markets could be delayed owing to slowdown in several international

economies.
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


2/15


www.dtz.com Property Times 2

Economic overview

The Indian economy expanded at a modest 5.3% in Q3 2012(Q2 of Financial Year 2012-13), one of the slowest growth

rates in the past decade (Figure 1). The growth in Q3 2012

was led by the Finance, Insurance, Real Estate and Business

Services sector which grew by 9.4%, followed by the

Construction sector which grew by 6.7%. In the recent mid-

year economic analysis, the government revised down the

GDP growth forecast for FY 2012-13 to 5.7% - 5.9%, from

7.6% estimated earlier. However, there are indications that

the slow growth rate may have bottomed-out and may

recover over the next few quarters.

Industrial output growth rate for the month of October2012 (quick estimate), captured in the Index of Industrial

Production (IIP), showed 8.2% y-o-y growth, much higher

than expected. This was the highest growth rate in the past

16 months. However, cumulative industrial output growth

during April-October 2012 was only a modest 1.2%,

reflecting modest economic activity due to both domestic

and global factors.

During Q4 2012, the BSE Realty Index gained 14% while the

Sensex, the broader Index, increased by a mere 4%,

reflecting the improved confidence in the real estate sector

in recent weeks. During 2012, the realty index grew by 53%while the Sensex rose less by 25% (Figure 2).

India's inflation rate dropped from 8.07% in September to

7.24% by November (Figure 3). However it still remains a

concern and hence there has been no reductions in interest

rates during Q4. The government in its mid-year policy has

indicated that the inflation rate may moderate to 6.8% - 7%

in Q1 2013, which may give some room for interest rate

reduction.

In spite of the fragile economic climate globally, the recent

approval of Foreign Direct Investment (FDI) in multi brandretail will pave way for several international brands to enter

Indian retail markets. Additionally with continued

moderation in inflation levels in recent months, retailers are

anticipating an increase in consumer spending in near

future. Driven by these key factors, retail leasing activity is

expected to be on an uptrend over the next six to nine

months.

Figure 1Gross Domestic Product (GDP) growth

Source: MOSPI, Govt of India, RBI

Figure 2BSE Realty Index

Source:www.bseindia.comFigure 3Inflation rate

Source:Trading Economics

0%

2%

4%

6%

8%

10%

12%

14,000

16,000

18,000

20,000

22,000

24,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Dec'11

Jan'12

Feb'12

Mar'12

Apr'12

May'12

Jun'12

Jul'12

Aug'12

Sep'12

Oct'12

Nov'12

Dec'12

Realty Index (LHS) Sensex (RHS)

5%

6%

7%

8%

9%

Jan'12

Feb'12

Mar'12

Apr'12

May'12

Jun'12

Jul'12

Aug'12

Sep'12

Oct'12

Nov'12
http://www.bseindia.com/http://www.bseindia.com/http://www.bseindia.com/http://www.bseindia.com/


3/15



Retail sector overview

The total mall space stock across seven major cities stood atapproximately 66 million sq ft at the end of 2012 as

compared to 62 million sq ft in the previous year,

representing an increase of 5%.

Even as approval of Foreign Direct Investment (FDI) in multi

brand retail improved retailers sentiments in the second

half of 2012, the cautious economic sentiment throughout

2012 resulted in developers going slow on their retail

projects, particularly in the first half of 2012. As a result,

new mall supply was lower by 62% in 2012 as compared to

the previous year.

Recording a drop of 87%, Pune witnessed the sharpest

moderation in new mall supply over the year followed by

Mumbai (72%) and Delhi NCR (70%).

The overall vacancy level across the seven major cities

witnessed a mixed response. Overall availability levels of

mall space were recorded at approximately 11% across the

seven major cities in Q4. Bengaluru and Mumbai recorded a

marginal drop in vacancy levels due to buoyant demand and

limited supply. However, availability levels in Delhi NCR

increased during Q4 due to some retailers shutting a few

low performing stores along peripheral locations (Map 1).

After witnessing some appreciation over the previous

quarter, retail rents across malls largely remained

unchanged in Q4 2012 (Figure 4). However as compared to

Q4 2011, Hyderabad witnessed highest growth in mall

rental values (13%), followed by Delhi NCR (11%).This canbe attributed to the realistic approach adopted by several

developers to stimulate demand and convert existing

enquiries into transactions. As a result, developers have

refrained from any unexplained increase in retail rents.

Following the strategy from mall developers, landlords onhigh streets also largely refrained from any increase in

rents. As a result, while Mumbai, Hyderabad and Kolkata,

witnessed rental appreciation of 3%-4% in Q4 as compared

to previous quarter, high street rents remained stable

across other cities. However, on a y-o-y comparison,

Hyderabad witnessed highest rental value growth (12%),

followed by Bengaluru (9%), Kolkata (9%) and Mumbai (8%)

(Figure 5).

The recent reform in FDI coupled with improvement in

overall sentiment is expected to bring an uptrend in leasing

activity from retailers in 2013. This coupled with limited

upcoming supply is likely to result in some upward

movement in retail rents, particularly in the second half of

2013 across most cities.

Figure 4India prime mall rental index

Source:DTZ Research

Figure 5India prime high street rental index

Source:DTZ Research

90

100

110

120

130

140

150

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Delhi NCR Mumbai Bengaluru Chennai

Pune Hyderabad Kolkata

90

100

110

120

130

140

150

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Delhi NCR (Connaught Place) Mumbai (Linking Rd.)

Bengaluru (Commercial St.) Chennai (Nawas Khan Rd.)

Pune (M G Rd.) Hyderabad (Himayathnagar)

Q4 2010 = 100

Q4 2010 = 100


4/15



Map 1

India market-wide retail stock and availability rates, Q4 2012

Source:DTZ Research, ESRI


5/15



Delhi NCR

Against a back drop of continued economic uncertainty indomestic and global environment and subdued consumer

spending coupled with restrained expansion plans of

retailers, retail activity in Delhi NCR remained subdued

throughout the year. Similar to the previous quarter, there

was a continued surge in retailer enquiries both from

foreign and domestic players. However, the conversion of

enquiries into deals remained significantly low.

The overall stock of mall space in the city at the end of 2012

stood at 24.14 million sq ft as compared to 23.89 million sq

ft in 2011, representing a marginal increase of 1.05%. New

supply dropped sharply by circa 69% with only 250,000 sq ftcoming on-stream during the year. No new supply was

delivered in Q4. Developers continued to go slow on

construction due to restrained demand and high double

digit vacancy levels. As a result of continued rollover of

projects to subsequent quarters, 2013 is expected to

witness circa four million sq ft of new retail space (Figure 7).

Due to the positivity infused as a result of approval in multi-

brand retail, developers are likely to increase the pace of

construction to have quality space ready for foreign brands

which are expected to enter Indian market in the next 18 to

24 months.

Although no new supply came on stream during the quarter

and take-up was significantly subdued, the vacancy level

during the quarter increased from 13% to 15%. The prime

reason for the increase is the restructuring exercise taken

up by several retailers resulting in the shutting down of low

performing outlets mostly in the peripheral locations of

Sohna Road in Gurgaon. The established and popular malls

on MG Road in Gurgaon, Saket and Vasant Kunj in Delhi,

and Sector 18 in Noida, continued to register negligible

vacancy.

Owing to subdued demand coupled with high double digitvacancy levels, mall rental values continued to remain

largely stable across the city during the quarter (Figure 8).

Only the established malls witnessed some appreciation in

rental values as a result of negligible vacancy. Owing to

constant demand and low vacancy, high street rents in Delhi

NCR appreciated between 1% and 4% q-o-q.

The change in the FDI regime is expected to revive market

activity as demand for organised quality retail space will

gradually build up with the entry of foreign brands. In the

mid-term, prime rents are also expected to witness some

appreciation as demand will improve with retailers, both

domestic and international, going into expansion mode.

However, in the near term, retailers will continue to be

cautious given the prevailing economic uncertainty.

Figure 6Major upcoming malls

Name of

Development

Area (sq ft) Estimated time of

supply

Parsvnath Metro

Mall

600,000 Q2 2013

Garden Galleria 550,000 Q4 2013

Emerald Plaza 350,000 Q1 2013

Source:DTZ Research

Figure 7Retail new mall supply, million sq ft

Source:DTZ Research

Figure 8Retail rental index

Source:DTZ Research

0

2

4

6

8

2006 2007 2008 2009 2010 2011 2012 2013 2014

95

100

105

110

115

120

125

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Gurgaon (Mall) Connaught Place (High Street)

Q4 2010=100


6/15



Mumbai

Even as economic uncertainty prevailed across largeeconomies globally as well as on the domestic front, the

retail market in Mumbai exhibited resilience. This can be

attributed to the long term positive outlook for the retail

sector in the city coupled with recent reforms allowing FDI

in multi brand retail. As a result, several retailers continued

to actively pursue their expansion plans with ensuing

buoyant leasing activity in the current quarter. Some of the

major brands which set up stores in Q4 included Starbucks,

which forayed into Indian markets with its first outlet in

Mumbai. Additionally, Kenneth Cole the New York based

luxury fashion brand made its debut in India by opening

its first outlet in Phoneix Market City mall. Other majorbrands which set up stores in the current quarter included

Kiehls, Di Bella Coffee, Simba and Brand Factory.

With no new addition of mall space in the current quarter,

the cumulative mall supply in 2012 stood at 0.55 million sq

ft. This is a drop of 72% in new mall supply when compared

with 2011 (Figure 10). As a result, availability levels in mall

space moderated marginally during the quarter owing to

restrained new supply coupled with buoyant take-up. While

overall mall vacancy level in the city is estimated at

approximately 8% to 9% in Q4, malls in prime precincts like

Goregaon - Malad and Lower Parel reported a vacancy levelof 3% to 5%.

Retail rents witnessed an upward movement across prime

high streets and established malls in Q4 2012. Linking Road,

one of the most preferred precincts for retailers, recorded a

rental value increase of 2% q-o-q and 8% y-o-y owing to a

rise in enquiries and limited vacancy levels. Additionally,

restrained supply coupled with limited availability and

buoyant demand helped developers to charge a premium

on existing mall rentals in Goregaon - Malad (Figure 11). As

a result the micro market witnessed a 4% increase in rental

values, both in terms of q-o-q as well as y-o-y.

Allowing FDI in multi brand retail and existing positive

sentiment are expected to further augment enquiries from

both Indian and international retailers in 2013. As a result,

the retail landscape in the city is expected to witness an

increase in both volumes and size of retail transactions in

the near future. Additionally, even as new mall supply is

expected to be muted (1.7 million sq ft in 2013) and centred

across peripheral locations, mall rental values are likely to

remain stable over the next three to six months. This can be

attributed to existing concerns amongst retailers who

believe that any further increase in rents will impact

business feasibility and result in retailers going slow on their

expansion plans.


Name of

Development


supply

Viva City 725,000 Q2 2013

Nirmal Lifestyle

Phase 2

700,000 Q4 2013

Source:DTZ Research

Figure 10

Retail new mall supply, million sq ft

Source:DTZ Research


Source:DTZ Research

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

95

100

105

110

115

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Goregaon-Malad (Mall) Linking Road (High Street)

Q4 2010=100


7/15



Bengaluru

During Q4, a few premium retailers expanded their footprint to newer sub-markets, including Debenhams in the

apparels category and Blu-O in the entertainment and

gaming space. PVR opened their latest and one of the

largest multiplexes in the citys western suburbs in

Rajajinagar. However, only modest new demand for space

was recorded in the last quarter of the year, in tandem with

the moderating growth expectations for 2013.

Vacancy rates in the operational malls in the city continued

to decline with no new mall operational in Q4. The limited

space available dwindled due to further deal closure during

the period. The overall vacancy dropped further to 2.1% atthe end of Q4 from 2.7% in Q3 and from 2.9% at the

beginning of the year.

With no new supply of retail space in Q4, the whole year

2012 saw new mall supply of only 1.6 million sq ft, over half

of which was in a project in the citys western suburbs.

During the year the central business district also witnessed

the opening of the first mall in four years, with the opening

of No 1, MG Road project which brought in new supply of

0.16 million sq ft of premium retail space. The scheduled

new supply for 2013 stands at 1.0 million sq ft followed by

1.2 million sq ft in 2014 (Figure 13).

The gradual shifting of focus away from high streets in the

central business district to the currently evolving high

streets in suburban residential catchments continued during

the year, which resulted in downward rental pressure at

Brigade Road and Commercial Street. Though these high

streets remain important for several retailers for the

visibility and branding they offer, there was also a general

shift to malls due to the overall better shopping experience

on offer. The high streets are also plagued by limited

parking options available to shoppers.

During Q4, mall rents continued to remain largely

unchanged, except in a few leading projects where smaller

spaces became available due to the retailer turnover. But

their impact on the average achievable rents has only been

marginal 1-2% (Figure 14). However, in the whole year

2012, the average rents improved by 9% in malls in central

Bengaluru, while the increase was marginally higher in high

streets. Also, we expect retail rental values to firm up

steadily in 2013, with the growth expected to pick up in the

second half of the year and due to the limited space options

available in the operational malls as well as in a few key

malls which are under construction as well.

Figure 12Major upcoming supply

Name of

Development


supply

RMZ Galleria 432,000 Q3 2013

Vega City Mall 380,000 Q3 2013

Galaxy Mall 189,762 Q2 2013

Source:DTZ Research


Source:DTZ Research


Source:DTZ Research

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

95

100

105

110

115

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Central Micro-market(Mall) Commercial St.(High Street)

Q4 2010=100


8/15



Chennai

In Q4, the retail leasing activity in the city remained modest,with a number of prominent retailers, both domestic and

international, adopting a cautious approach. The worsening

economic growth forecasts and the high inflation forced

retailers to scale down their medium-term growth

projections. Retailers continued to sharpen their focus on

costs with newer stores of smaller sizes of both vanilla

stores and department stores. During the year, some of the

retailers, both domestic and international firms, have

closely evaluated their footprint and have closed unviable

stores.

Luxury retailers have however been optimistic about thegrowing wealth and spending potential in the city, though it

has been a conservative market and slow to adopt luxury

brands than some other metros. A few of the major brands

which expanded their footprint to the city in Q4 in the high

street included Louis Vuitton, Toni & Guy and Haagen Dazs.

The number in the wealthy and aspirational class has been

increasing in recent years. However, there still is a large

wealthy but traditional class which still prefer to shop in the

oldest high street of T Nagar and nearby areas.

There was no new supply of mall space in Q4, and during

the whole of 2012, only a modest supply of 0.17 million sqft of retail space became newly operational in the city, in its

northern suburb of Perambur (Figure 16). It is the first

modern retail space in north Chennai. Currently, there are a

few large mall-cum-multiplex projects in the advanced

stages of development in the western and southern suburbs

of the city. The first to be completed is Forum Vijaya mall by

Prestige, which is likely to open in the first quarter of 2013.

There are other projects including Phoenix Market City in

Velacherry, Marg Junction on OMR and Ozone in Anna

Nagar which will bring large new generation retail space to

the market and thus help transform the citys suburbs to

self-contained retail hubs too, similar to the growth patternof other metros in the country.

Rents remained stable with the availability of quality space

both in malls and in established high streets during the

quarter (Figure 17). Developers continued to focus on

attracting newer tenants and improving occupancy levels

and hence offered competitive rates.

There is increasing acceptance of modern retail in the city

which helps in the transformation of the citys retail

landscape. This is particularly visible in the case of movie

watching experience with old single screen theatres slowly

fading away, or getting remodelled into multiplexes to cater

to the changing consumer preferences.


Name of

Development


supply

Forum Vijaya Mall 850,000 Q1 2013

Phoenix Market City 1,000,000 Q2 2014

Marg Junction 1,000,000 Q4 2014

Source:DTZ Research


Source:DTZ Research


Source:DTZ Research

0.0

0.5

1.0

1.5

2.0

2.5

Pre

2007

2007 2008 2009 2010 2011 2012 2013 2014

95

105

115

125

135

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Anna Salai (Mall) Khader Nawas Khan Road (High Street)

Q4 2010=100


9/15



Pune

In the current quarter, Punes retail market can becharacterized by cautious leasing activity from retailers and

restrained new supply. The overall retail scenario continued

to remain tenant favourable in the city which can be

attributed to high availability levels in malls and limited

enquiries from retailers.

In the midst of cautious economic outlook, a few brands

executed their expansion plans. Reliance Digital and

Premier Dead Sea were amongst the major brands which

opened new outlets in the city during the quarter.

With no new mall being completed in Q4, the overall newmall supply in 2012 stood at 0.4 million sq ft (Figure 19).

This is an 87% drop in new supply as compared to 2011

which saw five new malls with a cumulative leasable area of

3.15 million sq ft .

Developers and landlords exhibited renewed focus in

attracting tenants and improving occupancy levels. As a

result, rental values for both malls and high streets in Pune

remained unchanged q-o-q (Figure 20). With enough

availabilities to cater to existing demand, mall rents in

Nagar Road, which witnessed a significant 11% increase

over the first two quarters of 2012, remained stable in thesecond half of the year. The largely status-quo in high street

rents can be attributed to limited churn in occupancy across

prime high streets.

With no new supply and subdued transaction activity,

overall mall vacancy level in Pune largely remained

unchanged in Q4.

The recent approval from state government allowing FDI in

multi-brand retail is expected to bring a renewed

momentum in transaction activity in 2013. Several retailers,

who had earlier withheld their expansion plan whileawaiting clarity on FDI regulations, are now expected to

execute their plans in 2013. However, even as positive

sentiment prevails in the citys retail landscape, mall rents

are expected to remain stable over the next three to six

months owing to high availability levels. However, with

limited new mall supply expected in 2013 ( 0.65 million sq

ft), existing vacancy levels are likely to moderate in

forthcoming quarters which may result in some rental

appreciation in the second half of 2012.


Name of

Development


supply

Seasons Mall 650,000 Q1 2013

Xion Mall 220,000 Q2 2014

Source:DTZ Research


Source:DTZ Research


Source:DTZ Research

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

90

95

100

105

110

115

120

125

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Nagar Road (Mall) M G Rd. (High Street)

Q4 2010=100


10/15



Kolkata

Retail activity in the city remained subdued through mostpart of the year, though there was a continued surge in

retailer enquiries both from foreign and domestic players.

However, the conversion of enquiries into deals remained

significantly low in the last three quarters of 2012.

The overall stock of mall space in the city stood at 3.01

million sq ft as compared to 2.67 million sq ft in 2011,

representing an increase of circa 13%. New supply of 0.34

million sq ft came on stream in 2012 as opposed to no new

supply throughout the previous year. Retail space of two

and one million sq ft is expected to be delivered in 2013 and

2014 respectively (Figure 22). The market sentiment hasreceived a boost as a result of approval to 51% FDI in multi-

brand retail. Hence, developers are likely to increase the

pace of construction to capitalize on the opportunity

created because of the policy approval.

Owing to infusion of new supply and restrained take-up, the

availability during the quarter increased from 0.2 million sq

ft to 0.3 million sq ft, representing an increase of 21.5% q-o-

q. The availability ratio increased by three percentage point

over previous year and stood at 9%. The established and

popular malls on Elgin Road, South Kolkata and Salt Lake

continued to register low vacancy.

Owing to subdued demand, mall rental values continued to

remain largely stable across the city during the year (Figure

23). High street rents have also remained stable through

most part of the year. Owing to low vacancy in established

malls, retailers continue to consider high streets even

though the rents are comparatively higher.

In the wake of relaxation in FDI in multi-brand retail,

transaction activity is expected to improve in 2013. Mall

rents are expected to remain stable in the near term due to

the strong development pipeline of new retail space.However, the overall market sentiment will continue to be

cautious due to the prevailing economic uncertainty in

global and domestic environment.


Name of

Development


supply

Lake Mall 250,000 Q1 2013

Forum Mall 300,000 Q2 2013

North City 300,000 Q1 2014

Source:DTZ Research


Source:DTZ Research


Source:DTZ Research

0.0

1.0

2.0

3.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

95

100

105

110

115120

125

130

135

140

145

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Rajarhat (Mall) Park Street (High Street)

Q4 2010=100


11/15



Hyderabad

Hyderabad saw a slight increase in demand as most of theretail brands are trying to explore the upcoming markets of

Madhapur, Kukatpalli and Uppal region besides having their

presence in the central and suburban districts. Prime

developers like Lanco, Phoenix Groups, IVRCL and Prestige

are constructing new malls considering retail trend and

understanding the citys huge untapped potential for high

quality shopping malls. In Q4, Lanco Group launched its

prestigious Mega Mall with a total development of 3 million

sq ft considered to be the biggest mall in southern India. FDI

in multi-brand is set to create many opportunities for mall

developers, overseas investors and operators to explore

and capture different market segments.

The city, with the presence of already existing luxury brands

like Burburry, Longines and Mont Blanc, is also attracting

other multi-national apparel and shoe brands like Jack and

Jones, Giordano and Rockport along with some local brands

to open new stores across Hyderabad. Meanwhile the city

faces a strong demand supply mismatch due to limited

stock, which will stabilize once the pipeline supply is

completed over the next three years. 21% q-o-q drop in

mall vacancy was recorded by the end of this year because

of decent take-up and no new supply in Q4.

The overall city stock remained unchanged as no new

supply came to the market since the last two years. The

city, accustomed to the high street culture, is slowly

adapting to the fast and convenient window shopping

experience of the malls. Developers are optimistic of future

demand as retailers wait for new supply in place which will

invariably affect the cost of expansion. Hopefully we might

see a stable market by the end of next year as a huge

pipeline supply including 2.7 million sq ft in 2013, 4 million

sq ft in 2014 and another 2.4 million sq ft is expected to be

ready by 2015 (Figure 25).

Hyderabad saw an increase of 2.5% q-o-q and 14% y-o-y in

the mall rents as retailers strove to negotiate on rents with

the mall developers due to scarcity of retail stock in the

market (Figure 26). Considering rising demand, overall

market scenario and plenty of supply in the pipeline, rents

in SBD and CBD are likely to remain stable for the next

couple of quarters.

Hyderabad retail still shines as builders take new challenges

hand in hand with organised retail to change the face of the

city despite high inflation, economic downtrend and political

uncertainty. The city is set to develop a good retail market

as new brands enter the largely unexplored market creating

brand value and capturing customer demand.

Figure 24

Major upcoming supply

Name of

Development


supply

Forum Sujana 800,000 Q3 2013

Manjeera Trinity Mall 425,000 Q2 2013

Source:DTZ Research

Figure 25

Retail new mall supply, million sq ft

Source:DTZ Research

Figure 26

Retail rental index

Source:DTZ Research

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Pre 2007 2007 2008 2009 2010 2011 2012 2013 2014 2015

95

105

115

125

135

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Banjara Hills (Mall) Himayathnagar (High Street)

Q4 2010=100


12/15



Definitions

Stock: Total accommodation in malls, both occupied and vacant.

Take-up: Floor space acquired for occupation including the following:

1. Retail space let to an eventual occupier.

2. Developments pre-let or sold.

Prime rent: Represents the attainable prime rent that could be expected for a mall/retail development of

the highest quality and specification in the best location.

Availability: Total floor space in existing properties, which are physically vacant, ready for occupation and

being actively marketed.

New supply: Total retail space, which has reached practical completion (ready for fit-outs) during the

survey period. The forecasted new supply for the upcoming years is estimated based on the

developer announcements and timelines stipulated by them.

Pre-let/Pre-commit: A development leased or sold prior to completion.

Development pipeline: Total space which has received planning permission and will either be constructed or

extensively refurbished.


13/15



Abbreviations

q-o-q: Quarter-on-quarter

y-o-y: Year-on-year

EOI: Expression of Interest

LOI: Letter of Interest

BFSI: Banking, financial services and insurance

FDI: Foreign direct investment

IT/ITES: Information technology / Information technology enabled services

Delhi NCR Delhi

Noida Sector 18, Sector 25 A

Gurgaon NH8, M G Road, Golf Course Road, Sohna Road

Mumbai: Central Lower Parel, Worli, Mumbai Central

North Andheri, Santacruz

For North Goregaon, Malad

East Kurla, Ghatkopar, Bhandup, Mulund

Peripheral Vashi, Thane

Bengaluru: Central Vittal Mallya Road, Magrath Road, M G Road, Residency Road, Cunningham Road

South Koramangala, Jayanagar, Bannerghatta Road, Kanakpura Road

West Malleswaram, Rajaji Nagar

East Whitefield Main Road, EPIP Whitefield, ITPB Whitefield, Mahadevpura, Outer Ring

Road, KR Puram

Chennai: Central Mount Road, Anna Nagar, R K Salai

South Velachery, Old Mahabalipuram Road (OMR), GST Road

West Vadapalani

North Perambur

Pune: Central Modelina Road, Shankar Sheth Road, Shivaji Nagar

East HadapsarWest Kothrud, Aundh

North Koregaon Park, Kalyani Nagar, Nagar Road

Kolkata Central - Elgin Road, Camac Street

East EM Bypass, Rajarhat

South Garihat

Hyderabad Central Banjara Hills, Begumpet, Ameerpet, Raj Bhavan Road, Punjagutta, Somajigutta,

Abids, NTR Garden

North West Kukatpalli

South Himayath Nagar

South West Manikonda

West Jubliee Hills, Madhapur, KondapurEast - Uppal


14/15



Other DTZ Research Reports

Other research reports can be downloaded from www.dtz.com/research. These include:

Occupier Perspective

Updates on occupational markets from an occupier

perspective, with commentary, analysis, charts and data.

Global Occupancy Costs Offices 2012

Obligations of Occupation Americas 2012

Obligations of Occupation Asia Pacific 2012

Obligations of Occupation EMEA 2012

Property Times

Regular updates on occupational markets from a landlord

perspective, with commentary, charts, data and forecasts.

Coverage includes Asia Pacific, Bangkok, Beijing, Berlin,

Brisbane, Bristol, Brussels, Budapest, Central London,

Chengdu, Chongqing, Dalian, Edinburgh, Europe, Frankfurt,

Glasgow, Guangzhou, Hangzhou, Ho Chi Minh City, Hong

Kong, India, Jakarta, Japan, Kuala Lumpur, Luxembourg,

Madrid, Manchester, Melbourne, Milan, Nanjing,

Newcastle, Paris, Poland, Prague, Qingdao, Rome, Seoul,

Shanghai, Shenyang, Shenzhen, Singapore, Stockholm,

Sydney, Taipei, Tianjin, Ukraine, Warsaw, Wuhan, Xian.

Investment Market Update

Regular updates on investment market activity, with

commentary, significant deals, charts, data and forecasts.

Coverage includes Asia Pacific, Australia, Belgium, Czech

Republic, Europe, France, Germany, Italy, Japan, Mainland

China, South East Asia, Spain, Sweden, UK.

Money into Property

For more than 35 years, this has been DTZ's flagshipresearch report, analysing invested stock and capital flows

into real estate markets across the world. It measures the

development and structure of the global investment

market. Available for Global, Asia Pacific, Europe and UK.

Foresight

Quarterly commentary, analysis and insight into our in-

house data forecasts, including the DTZ Fair Value Index.

Available for Global, Asia Pacific, Europe and UK. In

addition we publish an annual outlook report.

Insight

Thematic, ad hoc, topical and thought leading reports on

areas and issues of specific interest and relevance to real

estate markets.

India Special Economic Zones December 2012

Singapore Executive Condominiums December 2012

Singapore Office Demand December 2012

China eCommerce & Logistics November 2012

Net Debt Funding Report November 2012

Great Wall of Money October 2012

Property Market Correlations October 2012

J-Reit October 2012

Rise of City Clusters September 2012

Singapore Luxury Condominiums September 2012

DTZ Research Data Services

For more detailed data and information, the

following are available for subscription. Pleasecontact [email protected] for more

information.

Property Market IndicatorsTime series of commercial and industrial

market data in Asia Pacific and Europe.

Real Estate Forecasts, including the DTZFair Value IndexTM

Five-year rolling forecasts of commercial

and industrial markets in Asia Pacific,

Europe and the USA.

Investment Transaction DatabaseAggregated overview of investment activity

in Asia Pacific and Europe.

Money into PropertyDTZs flagship research product for over 35

years providing capital markets data

covering capital flows, size, structure,

ownership, developments and trends, and

findings of annual investor and lender

intention surveys.
http://info.dtz.com/collect/click.aspx?u=/G1GTPto3VUxllk12cIlFjq/qHXI56GybRmUQ9u+aZY=&rh=ff00054c332ad84056dc2c66ff48ae56c7af2099http://info.dtz.com/collect/click.aspx?u=/G1GTPto3VUxllk12cIlFjq/qHXI56GybRmUQ9u+aZY=&rh=ff00054c332ad84056dc2c66ff48ae56c7af2099


15/15

DTZ Research

ContactsGlobal Head of Research

Hans Vrensen

Phone: +44 (0)20 3296 2159

Email: [email protected]

Global Head of Forecasting

Matthew Hall

Phone: +44 (0)20 3296 3011


DTZ Business ContactsChief Executive

Anshul Jain

Phone: +91 124 459 7500


Occupational and Development Markets

Satish B N

Phone: +91 80 4123 1600


Aniruddh Wahal

Phone: +91 22 4223 1600


Project Management

Deben Moza

Phone: +91 124 459 7500Email: [email protected]

Rudresh K V

Phone: +91 80 4123 1600Email: [email protected]

Investment Advisory

Rajeev Bairathi

Phone: +91 124 459 7500


Anuj Nangpal

Phone: +91 22 4223 1600


DISCLAIMER

This report should not be relied upon as a basis for entering into transactions without seeking specific,

qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no

responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this

report. Information contained herein should not, in whole or part, be published, reproduced or

referred to without prior approval. Any such reproduction should be credited to DTZ.

DTZ January 2013
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

dtz property times india retail q4 2012

Documents