India amongst the top ten global markets to recorded the highest rental increase year on year as per the annual report ‘Main Streets across the World 2013’ by global Real Estate consultancy firm, Cushman & Wakefield. Punjagutta in Hyderabad, India recorded the 8th highest growth in retail rental values globally with an annual growth of 29% year-on-year. South Extension in New Delhi, India was at 17th position with an annual growth 20% y-o-y. Kutuzovsky Prospekt in Moscow, Russia recorded the highest rental growth of 42% y-o-y. Celebrating its 25th year, the report is widely recognised as the barometer for the global retail market and ranks the most expensive locations in the top 334 shopping destinations across 64 countries.
In India during the first half of 2013, prime rents in most cities remained stable as a result of steady demand from retailers, particularly from the fashion and food & beverages segments. Steady demand from fashion and F&B brands was also the catalyst behind rises in India (2.1%). Overall, activity was slightly more restrained than in other major markets. New Delhi generally outperformed other cities. However, rental movements varied across sub-markets, with double-digit positive and negative growth depending on the location. Occupier demand from fashion, jewellery and F&B retailers was evident during the year for both high streets and shopping centres.
Khan Market in New Delhi remained the most expensive retail location with a monthly rental of 1,250/sf/mth recording a moderate 2% growth over last year. The location witnessed high demand from retailers but due to limited availability and transactions, rental values have only seen a marginal increase. Despite a correction of 11% over last year due to lack of interest from retailers, Mumbai’s Linking Road (750/sf/m) emerged as the second most expensive retail location followed by Connaught Place and South Extension.
In the global ranking of most expensive retail locations, Khan Market (1,250/sf/mnth) in New Delhi emerged at the 28th most expensive in the world, retaining its position as most expensive retail location in India. India however, dropped in the global ranking from 26th to 28th position due to the weakening of the Indian Rupee against US Dollar and largely stable rentals with limited increment in rental values in established retailing sectors. Hong Kong’s Causeway Bay overtook New York’s 5th Avenue as the most expensive retail location in the world. Hong Kong Central gained two positions to settle at 3rd position.
Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield said, ”While retail rentals globally registered a slower growth of 3.2% as compared to previous year on account of slowdown in economic uncertainties in the leading markets. The Asian markets saw a better average of rental increase at 4.5% in the same period. Economic risks remain for 2014 but conditions are expected to steadily improve across most markets. The retailers’ push towards the best and most sought-after locations will continue; however, limited supply and higher rental costs will create obstacles for some brands, leading a number of retailers to look at b alternative locations in close proximity to the main thoroughfares. While cities will grow in importance, a stronger focus on the use of all channels including online will also be seen to both speed and support expansion.”
Sanjay Dutt further added, ”Going forward we can expect some of the well managed shopping centres in key locations to start commanding significant rental values at par with main streets as Retail Malls are now increasingly positioning themselves as destinations with a few even going as far as putting added attractions like adventure rides etc. apart from high end cinema and F&B. Destination malls, specialty malls and luxury shopping centre developments are other formats being explored by NCR, Mumbai and Bangalore .Key High street locations in locations with solid captive audience and adequate facilities for shoppers will remain high on priority for retailers and therefore a rise in their values over a period of time.”
Sanjay Dutt further added, ”New age retailers are focused on providing an experience to their customers moving beyond just merchandise, therefore are showing preference for quality shopping malls that offer the right amenities. However shopping centre development is limited due to poor cash flow situation and over leveraged conditions of developers. Most investors, with the exception of few, are also showing limited interest in shopping centres. India’s main streets continue their appeal as new retailers are trying to create brand presence in key main streets. Large formats are selectively willing to go for stand alone or built to suit options as well.”
Source: myiris