Mall Development to Slow Down, Says Industry Experts
The growth of shopping malls is expected to be slower than residential real estate, as developers struggle to attract footfall and face challenges in developing new properties.
Mall DevelopmentResidential Real EstateRetail IndustryIndoor Entertainment VenuesConstruction PremiumsReal Estate MumbaiSep 18, 2024
Footfall in malls reduced during the April-June quarter on a sequential basis, as consumer sentiment was affected due to the elections and heat, and anchor tenants such as multiplexes performed poorly. Industry players have identified indoor entertainment venues, along with food and beverage, as a way to attract more footfall.
At a panel discussion during the real estate conclave MAPIC India 2024 in Mumbai, Sandeep Runwal, who heads the real estate firm Runwal Realty, observed that mall development in Mumbai, the nation's financial capital, has slowed, despite good traction in retail. Runwal owns the 1.2 million square feet-R City Mall in Ghatkopar, Mumbai, one of the most visited malls in India.
There is huge traffic in retail. The first half of this year was a little slow because of the elections, but we are seeing demand come back again, and the sector will continue to do well on the back of fashion, food and beverage... As for shopping malls in Mumbai, I have not seen any developer announce a new property here in the last five years. The government needs to re-look into its policies in order to attract investment into Mumbai.
According to industry players, construction premiums, which include payments to authorities for approvals, additional floor-space index, amenities, and others, often amount to nearly half of construction costs in the Mumbai market for commercial and retail properties.
Nirupa Shankar, joint managing director of Bengaluru-based developer Brigade Enterprises, said at the panel that while malls will grow as a segment, it will grow slower than the residential segment, owing to the six-seven year period where developers recoup their investment in form of rental payments. She added that with retail, developers are able to build in relatively larger rental increases.
Property consultancy JLL launched its report on indoor amusement centres, located in shopping malls and elsewhere, identifying it as an opportunity worth more than Rs 9,000 crore in revenue by 2030, which can bring in additional footfall to malls by providing an entertainment option to families with children.
About Brigade Enterprises \n\nBrigade Enterprises is a leading property developer in India, with a presence in Bengaluru, Chennai, and other cities. The company has developed several residential and commercial projects across the country.
About Runwal Realty \n\nRunwal Realty is a Mumbai-based real estate firm that has developed several residential and commercial projects in the city. The company owns the 1.2 million square feet-R City Mall in Ghatkopar, Mumbai, one of the most visited malls in India.
Frequently Asked Questions
Why is the growth of shopping malls expected to be slower than residential real estate?
The growth of shopping malls is expected to be slower than residential real estate due to challenges in developing new properties, subdued consumer sentiment, and weakness in major anchor tenants such as multiplexes.
What is the current state of the retail industry in India?
The Indian retail industry has been facing a slowdown in the past two quarters due to elections, lack of film releases, and subdued consumer sentiment.
What are some of the challenges faced by mall developers in Mumbai?
Mall developers in Mumbai face challenges such as high construction premiums, which include payments to authorities for approvals, additional floor-space index, amenities, and others.
What is the potential of indoor amusement centres in India?
According to a report by JLL, indoor amusement centres have the potential to generate revenue of over Rs 9,000 crore by 2030 and bring in additional footfall to malls.
Who are some of the major players in the Indian retail industry?
Some of the major players in the Indian retail industry include Brigade Enterprises, Runwal Realty, and JLL.
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