MARKETBEAT

Retail Snapshot Q1 2017

MUMBAI, INDIA

ECONOMIC INDICATORS Economy

For the October-December quarter of 2016, India’s Gross Domestic
National 2015 2016 2017F
Product (GDP) grew a healthy 7.0%, belying expectations of
GDP Growth 7.2% 7.1% 6.7% subdued growth due to demonetization. In February 2017, the
CPI Growth 4.9% 4.9% 4.7% Consumer Price Index (CPI), a key price indicator of the Reserve
Bank of India (RBI) for policy purposes, was seen at 3.6%, treading
Private Final Expenditure Growth 6.8% 6.2% 7.6%
below the government’s 2017-2021 average target of 4%. While
Govt. Final Expenditure Growth 5.5% 11.1% 10.5% there were expectations of a cut in the repo rate, the RBI has not
Source: CSO, RBI, Oxford Economics
revised its policy rates since October 2016 due to the firming up of
PRIME RETAIL RENTS – MARCH 2017 global oil prices and availability of ample funds with banks post-
demonetization. Investors are bullish about the organized retail
MAIN STREETS
INR EURO US$ Q-O-Q Y-O-Y
space (malls) in India given the low penetration of organized retail,
SF/MTH SF/YR SF/YR Change Change improving mall management, as well as the opportunity to list retail
Linking Road 750 129 139 -1.3% 0.0% assets under Real Estate Investment Trusts (REITs). In Nielsen’s
Kemps Corner/ 430 73 79 0.0% Global Consumer Index, which measures perceptions of personal
1.2%
Breach Candy finances and immediate spending intentions, India was ranked at
Colaba 610 105 114 -1.6% -2.4% top position for the second time in a row.
Causeway
Fort Fountain 385 65 71 0.0% 10.0% Market Overview
Lokhandwala 400 68 73 0.0% 0.0% Healthy momentum in mall leasing activities in select
Andheri submarkets. With no completion, this was the second consecutive
Borivali LT Road 400 68 73 0.0% 0.0% quarter of no new mall supply in the city. In this scenario of no fresh
Chembur 375 64 69 0.0% 0.0% supply and healthy leasing, overall mall vacancy in the city declined
by 0.4 percentage points to 15.8% at the end of the quarter. The
Vashi 350 59 64 0.0% 0.0%
revamping of an existing mall in Vashi drove significant interest
Thane 250 42 46 0.0% 0.0% from retailers. Mall leasing activities recorded significant traction in
the submarkets of Kurla and Vashi, driven by multiple segments
Malls
INR EURO US$ Q-O-Q Y-O-Y
such as apparels, fashion accessories, food & beverages (F&B),
SF/MTH SF/YR SF/YR Change Change and consumer electronics.
Lower Parel 820 139 150 0.0% 2.5%
Main streets remain inactive. Leasing activity remained largely
Link Road 400 68 73 0.0% 0.0% slow on main streets as tenants adopted a wait-and-see approach
(Andheri W)
in anticipation of a decline in rentals post-demonetization. However,
Malad 465 78 84 1.1% 1.1% F&B continued its leasing momentum during the quarter, with
Goregaon 470 78 84 2.2% 2.2% prominent F&B players such as D: OH! and Theory opening outlets
Kandivali* 200 34 37 0.0% in Kamala Mills.
0.0%

Kurla* 190 32 35 0.0% 0.0% Rental values increased in select malls and declined in select
main streets. Rental values increased 1-2% across malls in Malad
Ghatkopar 300 51 55 0.0% 0.0%
and Goregaon on the back of sturdy demand from retailers, amidst
Bhandup-Mulund 140 24 26 0.0% -3.4% limited availability of quality spaces. In contrast, rental values
Vashi 350 59 64 0.0% 0.0% declined by 1-2% on the main streets of Colaba Causeway and
Linking Road. This is attributable to continued lacklustre activity
Thane 260 44 48 0.0% 0.0%
triggered by demonetization as retailers anticipate a significant
Note: Asking rent (INR/sf/month) on carpet area of ground floor Vanilla stores is quoted
Conversion Rate: US$1= INR 65.46 and Euro 1 = INR 70.65
reduction in rentals going ahead. Rentals across other prominent
*Newly Added in 2015 main streets remained stable owing to steady demand.

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 MARKETBEAT

Retail Snapshot Q1 2017

MUMBAI, INDIA

SIGNIFICANT LEASING TRANSACTIONS Outlook

Mall leasing activities to maintain their momentum. With
Property Location Tenant Square Feet
expected entry/expansion of lifestyle retailers, leasing activities
Palm Beach Galleria Vashi INOX 23,000
are expected to be healthy in malls. At the same time, leasing
Pheonix Market City Kurla Forever 21 15,000
transactions are anticipated to remain moderate on main streets
Growel Kandivali Croma 12,000 as retailers are postponing their decisions, in anticipation of a
correction in rentals. The Grand Central Mall in Navi Mumbai,
SIGNIFICANT PROJECTS UNDER CONSTRUCTION measuring 1.1 million square feet (msf) is slated to be fully
Property Location Square Feet Completion Date operational in the beginning of the next quarter.
Nirmal Lifetsyle Mulund 800,000 Q4 2017
Phase 2 Mall rentals to remain largely range-bound while main
Reliance Mall Bandra Kurla 300,000 Q4 2017 streets rentals are expected to decline. Rental values across
Complex (BKC)
most malls are expected to remain stable in the second quarter
of 2017 led by a steady demand-supply environment. While
rentals across most main streets are expected to remain stable,
rentals in Linking Road and Colaba Causeway are likely to
further slide downwards due to weak demand.

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