Mall rentals up, but retailers continue buying in Delhi

Mall rentals in Delhi and the national capital region (NCR) have more than doubled in the past one-year, but retailers continue to book space. Out of the total mall space expected there, over the next year and a half, about 65 per cent has already been booked, reports CNBC-TV18.

Over 100 malls are to be developed in the next 12-18 months, and about 65 per cent of it is already reserved. Companies like Reliance Retail and the Future Group are aggressively hunting for mall space in Delhi and NCR. This is, in spite, of rentals being as high as Rs550-Rs600 per sq ft, in areas like Saket and Vasant Kunj in Delhi.

Surrounding areas, like Gurgaon and Noida, also saw mall rentals rise between 100-150 per cent, from Rs125 per sq ft last year.
The sealing drive by the Municipal Corporation of Delhi, which increased demand for authorised retail space, was mainly responsible for the hike in rentals. But despite such high rentals, it is still a question why retailers are still so aggressive in these markets.

"We had instances of people traveling from North or West of Delhi to South Delhi, for entertainment options. That is changing now in every city. People would rather go to a destination closer to their residence or office, and that latent demand is now making retailers expand their footprint across all cities," said Vivek Dahiya, Director, DTZ India.

Out of the total expected supply, over 50 malls will be developed in Delhi, while about 35 malls will be developed in Gurgaon. Noida will see approximately 16 malls being added, and about 20 malls will be built in Ghaziabad and Faridabad.

However, with so many malls coming up, experts say, there could be an oversupply, which would eventually lead to stabilisation of rentals.