Is malls segment headed for a spell of consolidation?

DLF Place, a popular premium shopping mall at Saket in south Delhi, is set to reopen with a new look — and higher rents — after a renovation that has taken six months. owned by India’s leading real estate developer, DLF, the mall will be relaunched as DLF Avenue. Monthly rentals in the 516,000-sq-ft space are expected to shoot up two-fold from earlier rates.

With the mall having been revamped to accommodate more eating outlets, stores and shared office spaces, a slew of international brands, including Japanese apparel firm Uniqlo and French sportswear brand GO Sport, have already lined up to set up shop there.

“95 per cent of retail space in the mall is already leased out and we have doubled the monthly rentals,” said Pushpa Bector, executive director, DLF Shopping Malls.

According to her, revamping the mall has enabled the company to “unlock the real value of the property” that has seen rising demand for retail space from various brands over the last few years. At present, rents on the ground floor of the mall (the most sought-after space) can go up to ₹350-400 per sq ft per month.

The DLF experience shows that even as several malls in India continue to face survival challenges due to poor management and the growing popularity of e-commerce, a handful of high-end malls hardly have any vacant spaces.

Rents in these malls have skyrocketed in the last year, as demand for premium space from both international and domestic brands continues to rise, according to mall developers and real estate experts.

Online retailers that have opened stand-alone stores or small touch points in the offline space are also adding to the overall demand for retail space.

According to data compiled by property consultancy firm JLL India, rents in some of the marquee malls have jumped threefold, particularly in properties where the occupancy rate is over 90%. On a pan-india basis, malls with over 95% occupancy have seen rents rise 6%, against an average 2% growth across all malls, showed JLL’S September report. It also pointed out that brands were paying 40-50% premiums to stay at malls built by premium developers.

Some of the high-end malls with over 90% occupancy are DLF Promenade and Select City Walk in Delhi, Viviana Mall in Thane, Oberoi Mall in Mumbai and South City Mall in Kolkata.

“Rentals keep increasing in good malls as there is a demand and supply mismatch. Today, these malls have also realized that there are only a handful of such properties. Hence, they see it as an opportunity to command high premiums from brands,” said Shubhranshu Pani, managing director (retail services), JLL India.

Rentals in some malls, such as DLF Promenade and Mall of India in the National Capital Region (NCR), have grown by 20-22% on an annual basis, said DLF’S Bector, adding that these malls have only about 2% vacancy at the moment.

At High Street Phoenix, a leading mall in Mumbai and considered one of the best performing in the country, rents grew by around 17% in the last fiscal year, said a company official who did not want to be identified. The past four to five years have seen growth of 12-13%, the person added.

According to Gurvineet Singh, chief operating officer, Viviana Mall, around 30 new brands have been signed up in the last one year. He said the mall, which is jointly owned by Singapore’s sovereign fund GIC and Mumbaibased Sheth Developers, has seen rental growth of 75% in the last four years.