After covid blues, new mall projects are back on track

The fresh supply, a majority of which is expected to come up in Bengaluru, Mumbai, and Noida, however, is significantly lower than the 8.5 million sq. ft added across the top seven cities in 2019, Anarock said in a note.

New malls will be spread across tier 1 and tier 2 cities, with tier 1 cities accounting for around 90{df277fece0e332513078d4db57f50d7f29a9f255adc120b3235ad73f23ad2e97} of the additional space, the consultancy said. Lucknow and Amravati are among the tier 2 cities that will see an addition of two new malls each.

In the current year, Bengaluru will add at least 1.22 million sq. ft spread over two new malls. However, Mumbai, which witnessed a large number of malls being built over the last few years, is likely to add only 1.1 million sq. ft of new space spread across three malls. A severe second wave of covid-19 infections in the state, which impacted livelihoods, has also made real estate developers more cautious. Pankaj Renjhen, chief operating officer and joint managing director, Anarock Retail, said incoming supply is a combination of pending projects from 2020 along with those scheduled for completion this year.

Noida, too, will see approximately 1.1 million sq. ft of new malls.

The pandemic has had a devastating effect on the country’s retail sector. Retailers and mall operators have gone through several rounds of temporary closures. Construction work also paused during the lockdowns imposed to contain the spread of coronavirus. As a result, mall completions in 2020, at approximately 2.1 million sq. ft, dropped 75{df277fece0e332513078d4db57f50d7f29a9f255adc120b3235ad73f23ad2e97} year-on-year.

Shoppers, too, swapped visits to malls with stores located in high streets or chose to order clothes and grocery online, delaying meaningful recovery. Cinemas, a large draw for mall goers, continue to work under restrictions or remain shut in several states.

The situation also triggered several rounds of rent negotiations between developers and brands.

However, as the economy opens up and the nationwide vaccination drive picks up, shoppers are returning to malls, though footfalls remain lower than pre-pandemic levels.

The pandemic will have a short-term impact on investments in new projects, Renjhen said. “This is temporary. As the cash flows of developers improve over the next few months, we expect a pick up in activity,” he said.

In June this year, mall developer Phoenix Mills Ltd and Singapore’s sovereign wealth fund GIC partnered to establish a $733 million investment platform for retail-led mixed-use assets in India. In March 2021, Blackstone Group concluded the acquisition of real estate developer Prestige’s retail and commercial portfolio.

Demand from retailers has started seeing momentum, particularly with well-capitalized business houses such as Trent and Infinity Retail from the Tata Group, Reliance Retail, and Reliance Brands, apart from several food and beverage brands, he said.

Developers, on the other hand, are looking at opening new projects.

DLF Retail has a pipeline of two retail and food and beverage projects scheduled to open in Chennai and Gurgaon, respectively, said the company’s executive director, Pushpa Bector. However, no new malls are under development.