New supply of retail space to increase by almost 50%, to touch 134 mn sq ft in the next 5 years
June 3rd, 2024
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The existing retail stock, which stands at 89 million sq. ft, is expected to grow by almost 50% and touch 134 million sq. ft by the end of 2028. Delhi NCR is expected to garner the highest share (43%) in the supply in the next five years followed by Hyderabad with a share of 21% and Chennai having a share of 13%, a report by JLL has said.
The top seven cities - Mumbai, Delhi NCR, Bengaluru, Hyderabad, Pune, Kolkata, Chennai - will witness infusion of around 45 million sq. ft. of retail space through 88 new retail developments, outpacing the supply of the past decade (2014-2023), which was at around 38 million sq. ft, a report has said.
Out of the 88 upcoming retail developments in the next five years, there will be 12 large-sized projects encompassing an area of at least 1 million square feet each. These projects will contribute a substantial portion, amounting to 37% of the total supply expected until 2028. This marks a notable increase in comparison to the previous decade, where retail centres of 1 million square feet and above accounted for just 27% of completed supply, it showed.
In response to the evolving preferences of modern shoppers seeking unique experiences, developers are increasingly prioritizing the development of larger retail centres. The data also suggests that upcoming retail developments will be larger in size compared to those that became operational in the last decade.
Over the past 10 years, the average size of new retail supply was approximately 391,099 sq. ft. However, this is expected to increase by 30% to reach 507,341 sq. ft with the addition of new supply during Q2 2024-2028. This signifies a notable trend in the retail market moving towards larger-sized experience-led developments, the data showed.
Out of the 88 upcoming retail developments in the next five years, there will be 12 large-sized projects encompassing an area of at least 1 million square feet each. These projects will contribute a substantial portion, amounting to 37% of the total supply expected until 2028, it showed.
"This marks a notable increase in comparison to the previous decade, where retail centres of 1 million square feet and above accounted for just 27% of completed supply. Furthermore, Delhi NCR will see two retail centres of over 2.5 million sq. ft each in the next 5 years,” said Samantak Das, Chief Economist and Head Research and REIS, India, JLL.
Increasing global travel has heightened shoppers' awareness, leading to a demand for better retail experiences. Larger developments incorporating entertainment, leisure activities, and dining options are creating comprehensive destinations that cater to the modern consumer.
Majority (78%) of the upcoming retail supply of around 45 million sq. ft is lease-based that allows developers to have greater control over the quality of the tenant mix and day-to-day management of the property, thus enabling them to command higher rentals. As a result, they can curate a diverse mix of tenants that align with their vision for the development.
“Retail assets remain an attractive investment avenue for large foreign institutional investors, who are increasingly opting for greenfield and brownfield development platforms. Notably, 16% (7.2 million sq. ft) of the new supply is owned by institutional players,” said Rahul Arora, Head of Office Leasing Advisory and Retail Services, India, JLL.
Source: hindustantimes.com
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