Global real estate consultant firm Jones Lang LaSalle India lists out the performance of Mumbai's retail real estate market in the second quarter of this financial year.
Demand
In 2Q13, net absorption was notably higher on q-o-q basis, reaching 439,600 sq ft or the highest level in the past 5 quarters. The majority of net absorption was due to precommitments in new completions. However, unoccupied space in new supply outpaced absorption and resulted in the vacancy rate rising by 150 bps q-o-q to 22.8 percent.
In 2Q13, High Streets saw a modest level of demand with established areas such as Colaba and Bandra continuing to attract retailers, while Borivali and Ghatkopar showed improvement.
The Suburbs witnessed healthy leasing activity, supported by its good blend of residential, office and retail space. This submarket accounted for the majority of area leased by retailers. The second quarter was characterised by food and beverage brands expanding their presence in several pockets of the city.
Notable leases recorded in the quarter included: Being Human leasing 2,234 sq ft at Infiniti Mall in Malad, Cotton World leasing 1,297 sq ft at Oberoi Mall in Goregaon, Reliance Footprints leasing 2,643 sq ft at Magnet Mall in Bhandup, and Reliance Trendz leasing 9,800 sq ft at Viva City Mall in Thane.
Supply
Viva City Mall commenced operations in 2Q13 with an area of 920,000 sq ft and saw a moderate volume of pre-commitments.
Asset Performance
Rents and capital values appreciated in the range of 1- 2 percent q-o-q across all submarkets. A noted change in the quarter was that the Prime North submarket witnessed an appreciation of rents and capital values, albeit minor, after remaining stable for the previous six quarters. On a y-o-y basis, market yields for the Prime South & Prime North compressed marginally by 10 bps.
12-Month Outlook
Net absorption is likely to remain subdued with upcoming supply likely to see low levels of pre-commitment. However, Viva City Mall which began operations in the quarter is likely to see further leasing activity in upcoming quarters. We anticipate leasing activity in 1H14 to slow on the back of the national election.
Furthermore, the government’s implementation of FDI policy into the retail sector has been slow and has led to retailers being cautious about the progress going forward. Rents and capital values are likely to remain relatively stable in all submarkets over the next 12 months.
No comments:
Post a Comment