cbre - india retail market view - 1h, 2011

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  • 8/2/2019 Cbre - India Retail Market View - 1h, 2011

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    2011, CB Richard Ellis, Inc.

    www.cbre.co.in January - June 2011

    India Retail

    The first half of 2011 witnessed heightened activity in

    the Indian retail industry, buoyed by increasing

    transaction activity and surging retailer interest. Many

    leading brands and retailers had started to renew

    expansion plans by the end of 2010, a move

    heightened in the first half of 2011. Various established

    brands and other national as well as international

    retailers continued with their expansion plans across

    the country. A positive economic outlook, surging

    consumer confidence and spending helped the market

    maintain its pace of recovery from the downturn.

    Almost 6 million sq ft of organized retail mall space

    was added to the country in the first half of 2011. This

    was concentrated in the NCR, Mumbai, Bangalore,

    Pune and Chennai. Infinity Mall by K Raheja Group in

    Mumbai was the largest mall completion in the review

    period; spread across 1.25 million sq ft. NCR

    witnessed the completion of two eagerly awaited mall

    properties Pacific Mall and Moments Mall in West

    Delhi, even as a substantial pipeline is also present in

    the suburbs of Gurgaon and Noida. Moving ahead, it

    is anticipated that retail mall supply in NCR would be

    concentrated more towards the Noida region. Inorbit

    Mall in Pune and Innovation Mall in Bangalore were

    amongst other key project completions. This supply is a

    consequence of the positive sentiments amongstretailers on spatial expansion and enhancing their

    footprints across the country. Pre-commitments in

    under construction assets in prime locations is also an

    encouraging sign that rental flexibility, along with the

    minimum guarantee coupled with revenue share

    model has become more acceptable in the industry.

    In all the seven cities presented in this review, the retail

    real estate market appears to be promising with anappreciable increase in enquiries being witnessed

    from retailers. Retail mall rentals witnessed growth in

    prime city micro markets, while witnessing stability in

    suburban (supply laden) destinations. Moving ahead,

    transaction activity and size are expected to increase

    on the back of increase in consumer spending and

    expanding mid-income purchasing power. However,

    despite this incremental demand, retail mall supply

    pipeline is huge, especially in leading cities like NCR,

    Mumbai, Bangalore, Pune and Chennai. This would

    ensure that pressures remain on developers to offer

    rental discounts and transaction flexibility to avoid

    higher vacancy levels in the long term.

    High street retail has also been on a growth trajectory

    for the last few months, with leading brands opening

    stores on prime streets like South Extension (Delhi) and

    Kemps Corner (Mumbai). Enquiries for prime high

    street retail spaces remained high during the review

    period and is expected to increase in the coming few

    months. The sustained increase in demand led to an

    escalation in rental values across most leading high

    street destinations.

    Hence, while the retail landscape of India appears

    dynamic and is continuously evolving, it is imperative

    for retailers and developers to increasingly cooperate

    and adopt practices aimed at improving footfalls and

    conversion ratios in mall properties. It is expected that

    the coming few months might witness the relaxation of

    restrictions on foreign direct investment in multi brand

    retail in India. This is supposed to be a positive move, to

    be implemented in a phased manner starting with the

    leading metropolitan retail hubs like Delhi and

    Mumbai. This provides an immense opportunity to

    developers looking at reducing vacancy pressures in

    their existing properties, while finalizing large scaletransactions for future commitments.

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    2011, CB Richard Ellis, Inc.

    India

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    National Capital Region (NCR)

    Market Summary

    The year 2010 witnessed a resilient retail market in

    NCR, post the recovery from the global recession in

    2009. The positive trend continued into the first half of

    2011 as well, with market sentiments being optimistic.The first half witnessed three malls commencing

    operations namely Pacific Mall (West Delhi), Moments

    Mall (West Delhi) and R-Mall (Sohna Road, Gurgaon).

    As a result, close to 2 million sq ft of retail supply came

    on stream. Transaction activity increased as premium

    international brands entered the NCR market, while

    existing retailers explored opportunities to execute

    expansion plans. Besides international retailers,

    domestic brands such as Lifestyle, Woodland, Reliance World and Lilliput amongst others were also in an

    expansionary mode.

    International brands that launched operations over the

    past six months include Vans, Kiehl's at Ambience Mall

    (Vasant Kunj), Clark's at DLF Promenade, Diesel, Jack

    and Jones, Only, Quicksilver and Roxy at Ambience

    Mall (Gurgaon). French high end apparel brand

    Lacoste signed for a new store in Select City Walk

    (Saket). In luxury retail, the Swiss leather brand Bally

    signed for a flagship store at DLF Emporio in Vasant

    Kunj.

    The newly opened Pacific Mall at Rajouri Garden has

    been receiving an overwhelming response, with

    increasing number of footfalls. The property has

    emerged as the most high-end retail destination in

    West Delhi and is being sought after by leading

    international retailers. While Canon Image Squareinaugurated its store in the mall in the first half of 2011,

    other brands such as Bebe are expected to launch their

    flagship stores in the mall in the coming months. West

    Delhi also witnessed the commencement of operations

    by Moments Mall in Kirti Nagar. The mall has a built up

    area of 800,000 sq ft with retailers such as More (the

    retailer's largest store; spread over 60,000 sq ft),

    Westside and Lilliput. The mall also has a dedicated

    area for an indoor amusement park spread over40,000 sq ft.

    British shoemaker, Clark's re-entered the Indian

    market (after a not so successful tie-up with Lifestyle

    previously) with its stores opening at DLF Promenade

    (Vasant Kunj) and Connaught Place. Connaught Place

    also witnessed the launch of a store by Marks and

    Spencer. This was the first store by the retailer located at

    a high street destination in Delhi. South Extension also

    witnessed store launches by Pantaloons and US Polo.

    Overall, rental values in malls have witnessed an

    increment across all key micro markets in the region.

    Malls in Saket and Vasant Kunj in South Delhi

    witnessed a rental increase of around 9-12%

    compared to the previous review period. Amongst the

    suburban destinations, Gurgaon witnessed

    considerable rental appreciation of almost 15-16% as

    various brands consolidated outlets to tap the mid and

    upper mid-income catchment in the micro-market.

    Noida witnessed stability in rental values due to limited

    transaction activity. High street rentals also

    strengthened across all leading destinations.

    Connaught Place and Khan Market witnessed an

    approximate4 - 5% increase in rentals, while South

    Extension witnessed a steep appreciation of almost 15-

    16%. The increment occurred due to revival in footfallsin these traditional shopping destinations.

    Rental Trends

    Gurgaon Ground Floor, Ambience Mall 10,000 Bestseller Brands

    New Delhi Plaza Building, Connaught Place 12,000 Marks and Spencer

    New Delhi DLF Place, Saket 15,000 Pure home and Living

    New Delhi Second Floor, Pacific Mall 3,000 Mamagoto

    Gurgaon Ground Floor, Ambience Mall 2,800 Diesel

    New Delhi Inner Circle, Connaught Place 1,900 Clarks

    New Delhi First Floor, Select Citywalk 750 Lacoste

    District Property Size (Sq ft) Tenant

    Major Leasing Transactions

    HIGH STREET RENTALS

    High Street Average Rental Average Rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Khan Market 1100-1200 1000 - 1200

    South Extension 600-800 550 - 750

    Basant Lok 250-350 250 - 350

    Connaught Place 550-700 500 - 700

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    Outlook

    Going forward, developers of Grade-A malls are

    expected to remain selective about brand mix and

    would retain firm control over tenant churn, as new

    market entrants continue to express preference for

    these properties. As residential areas expand more

    towards Noida and Gurgaon, the demand for large

    retail formats such as hypermarkets is gaining

    momentum. Sensing the retail potential of these

    large format projects (which Delhi cannot offer due

    to limited space for large formats), rentals are

    expected to witness an upward movement in the

    micro markets of Gurgaon and Noida in the

    coming months. The market is expected to maintain

    the optimistic trend over the next few months as

    developers have renewed stalled projects and

    domestic apparel companies are scouting for

    global tie ups aimed at providing the Indian

    shopper a truly global shopping experience.

    Mumbai

    Market Summary

    The retail market in Mumbai witnessed an increase in

    queries from new as well as existing retailers leading to

    an upswing in transactions. While the cautiousapproach (adopted through most of 2009 and 2010)

    helped retailers to curtail the losses on account of

    reduced footfalls, retail merchants have embarked on

    an expansion drive in 2011. This expansion spree is

    expected to continue over the next six to twelve months

    as retailers look for leasing spaces in high streets as

    well as mall properties.

    Mumbai witnessed the inauguration of the much

    awaited Infinity Mall at Malad (W) with the opening ofstores by brands like Westside, Pantaloons, Reliance

    Trends, Aldo and Timberland. Another mall that

    commenced operations was the second phase of

    Growel's 101, a prominent mall located in the Western

    Suburbs with anchor retailers like Pantaloons, Big

    Bazaar, Cinemax and E Zone amongst other

    international and national retailers. Brands such as

    Timberland, Hidesign, Paul and Shark, Chanel

    Cosmetics, Aldo and Canon opened their stores in the

    High Street Mall during the first half of 2011. Future

    Group launched its first gourmet food retail chain -

    Food Hall spread over 15,000 sq ft in Palladium Mall.

    Other prominent malls such as Oberoi Mall

    (Goregaon), Infinity (Andheri West) and Korum Mall

    (Thane) also witnessed opening of brands like

    Haagen-Dazs, OVS and Celio respectively.

    Upcoming Grade A malls like Vivacity (Thane), R-City

    Centre (Ghatkoper) and Market City (Kurla) are

    witnessing increased traction as these malls are

    anticipated to open during the second half of 2011.

    Most of these malls would be home to international

    brands like Bebe, Chicco, Cinepolis, L'occitane, DKNY

    Accessories, Alcott, Boggi, Guess, Next, Nautica,

    amongst others, with many of these brands entering

    the Western Mumbai Region for the first time.

    While malls have witnessed high transaction activity,

    high street destinations have also been receivingqueries from numerous brands and retailers. Hermes,

    ORGANISED RETAIL RENTALS

    Mall Clusters Average rental Average rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Saket District Centre 275-375 250 - 350

    Vasant Kunj 200-250 175 - 225

    Noida 150-250 150 - 250

    Gurgaon 125-225 100 - 200

    Mall Clusters

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    the French luxury brand, has opened its first store in

    Mumbai spread across two floors and 3,000 sq ft in

    one of Fort's iconic Victorian buildings. Kitsch, a luxury

    multi brand outlet, opened its first high-street store in

    Mumbai spread across an area of 3,000 sq ft at

    Kalaghoda. Further, Aston Martin, the British luxury car

    manufacturer opened its first showroom in the city at

    Kemps Corner, which also happens to be its first store

    in the country. Linking Road observed the opening of

    stores such as GAS, Accessorize and Tommy Hilfiger

    TravelGear along with Indian brands like Catwalk and

    Fastrack. Linking Road will also witness the opening of

    flagship stores by brands such as Celio, OVS and

    Forever New over the next couple of months.

    An increase in retailer activity contributed to an

    appreciation in rental values in the first half of 2011.

    Mall developers continue to work on the Minimum

    Guarantee/Revenue Share Model with retailers,

    whereas high street landlords have revised the rentals

    upwards and are not too keen to follow the Revenue

    Sharing Model. Majority of the landlords in prime high

    streets are pressing for an upward revision in rentals as

    they want to capitalise on the rising demand coupled

    with limited quality supply. As a result, most high streets

    witnessed an increase in rentals, with the most notable

    increase observed on Colaba Causeway, witnessing

    an increase of almost 10-11%. While scarcity of mall

    supply has led to a marginal increase in rents across

    the city, malls in Central Mumbai have observed a

    significant rise, with rentals appreciating in the range

    of 18-20%, primarily on account of high demand and

    low supply of quality space.

    Rental Trends

    Outlook

    An overall positive sentiment in the market with

    improved purchasing power and increasing footfallshas led developers to quickly add new retail spaces

    to the existing inventory. We foresee this trend to

    continue in the near future as well. Retailers will

    continue to enquire for space in Grade-A mall

    projects and on prime high street locations. Majority

    of the malls such as Vivacity (Thane), R-City Centre

    (Ghatkoper) and Market City (Kurla) have achieved

    significant absorption levels and are slated to open

    towards the end of this year bringing in a new mix ofdomestic and international brands.

    Major Leasing Transactions

    Lower Parel Palladium Mall 15,000 Food Hall

    Santacruz, Linking road Amiya Building 5,400 Celio Future Fashion

    Kalaghoda Heritage Building 3,000 Kitsch

    Santacruz, Linking road Usha Villa 1,600 GAS

    Lower Parel High Street Phoenix 900 Canon Image square

    District Property Size (Sq ft) Tenant

    High Street Average Rental Average Rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Linking Road 600-900 650 - 800

    Colaba Causeway 450-500 400 - 450

    Kemps Corner 425-450 400 - 450

    HIGH STREET RENTALS

    ORGANISED RETAIL RENTALS

    Mall Clusters Average rental Average rental

    (Jan June 11)I (July Dec 10)

    NR/sq ft/month INR/sq ft/month

    Central Mumbai 375-500 300 - 425

    Western Suburbs 185-275 180 - 250

    Eastern Suburbs 160-250 170 - 200

    Mall Clusters

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    Bangalore

    Market Summary

    Rental Trends

    The first half of 2011 witnessed an upswing in

    transaction activity aided by buoyant economic

    conditions and positive market sentiment. A number of

    leading national and international brands are makinga beeline for space uptake in upcoming malls as well

    as high streets in Bangalore. The city is witnessing a

    change in its retail set-up with a number of

    hypermarkets getting operational. The city already has

    more than 30 hypermarkets operational in leading

    malls across the city, while another 30-35 are in the

    pipeline over the next three to five years. High streets in

    the city have witnessed healthy absorption and rising

    enquiries from retailers, which is an encouraging sign

    for the retail market in the city. This has encourageddevelopers to tap the growing need of quality space by

    initiating new mall projects.

    The market observed increased activity as the first half

    witnessed the opening of four malls namely Innovation

    Mall, Royal Meenakshi Mall, Soul Space Spirit and Soul

    Space Arena. The four malls combined together added

    supply close to 1.4 million sq ft. Prominent retailers

    such as Westside, Pantaloons, Taco Bell (Innovation

    Mall), Hypercity, Cinepolis, Max Fashions, TGIF,Reliance Trends, Croma (Royal Meenakshi Mall),

    Central, Cinemax (Soul Space Spirit) and Total Hper,

    Cinemax (Soul Space Arena) have leased space in

    these malls.

    Rental values witnessed an increase across prominent

    high streets such as Jayanagar, Commercial Street,

    Brigade Road, as compared to the second half of

    2010. Rental values increased by almost 10-14%

    across the high streets of Commercial Street,

    Jayanagar and Brigade Road as these markets have

    limited supply. The Indiranagar market on the other

    hand maintained stability in rental values.

    In terms of organised mall retail, the South Bangalore

    market witnessed an increment of approximately 22-

    25%. This was primarily on account of high demand

    for Vega Mall in Jayanagar which is likely to get

    operational by 2012. The East Bangalore market

    comprising of Whitefield, EPIP Zone and Varthur

    witnessed traction with rentals moving upwards by

    approximately 10-12%.

    Major Leasing Transactions

    Outer Ring road Bellandur Soul Space Arena 300,000 Central

    Bann erghatta Road Royal Meenakh si Mall 72,000 Hypercity

    JP Nagar Vishnu Estates 50,000 MORE Hyper

    Bann erghatta Road In novation Mall 25,000 Gopalan Cinemas

    Rajajinagar Brigade Orion 20,000 Zara

    Bannerghatta Road Innovation Mall 20,000 Pantaloons

    Bannerghatta Road Innovation Mall 18,000 Westside

    Lavelle Road Stand alone 15,000 Biere Club

    Indiranagar 12th Main Stand alone 14,000 Golds Gym

    Bannerghatta Road Innovation Mall 6,000 Taco Bell

    District Property Size (Sq ft) Tenant

    HIGH STREET RENTALS

    High Street Average Rental Average Rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Commercial Street 225-275 200 - 240

    Brigade Road 250-300 225 - 275

    Jayanagar 11th Main 4th Block 150 - 180 140 - 160

    100 Feet Road, Indiranagar 120 - 140 120 - 140

    ORGANISED RETAIL RENTALS

    Mall Clusters Average rental Average rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    CBD - North Bangalore 120 - 180 130 - 150

    South Bangalore -

    (Koramangala/Jayanagar) 100-110 70 - 90

    East Bangalore -

    (Whitefield, Varthur, EPIP Zone) 80-90 70 - 80

    Mall Clusters

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    Outlook

    Retailers are currently in an expansionary mode

    and developers are trying to leverage this by

    launching projects with quality space. Due to the

    lack of quality space in CBD and prominent high

    streets, untapped areas with good catchment are

    likely to generate interest from retailers. As a result,micro markets which are typically 10 15 km from

    the city are high on the radar of developers for

    developing various types of retail formats. In terms

    of rental values, rents have found support at the

    current levels with low possibility of a downward

    movement. The revenue sharing model is gaining

    popularity with anchor tenants displaying

    preference for the model. Large format retailers as

    well as departmental stores are positive on the

    market and have elaborate plans to make theirpresence felt. With more than 2.7 million sq ft of

    organised retail space expected to come on stream

    over the next few months (Inorbit Mall, Orion Mall

    and Market City Mall), the current landscape is set

    to change dramatically.

    ChennaiMarket Summary

    Retailers as well as landlords have put behind the

    negative sentiments of the meltdown and have

    aggressively pursued expansion plans. The

    construction activity has also picked momentum and is

    expected to maintain this trend over the coming six to

    twelve months. However this increased supply may not

    be sufficient to cater to the increasing retailer demand,especially in the CBD and Off CBD locations.

    In terms of organised retail, Chandra Mall spread over

    an area of 150,000 sq ft located in Virugambakkam

    towards West of Chennai commenced operations in

    the first half of 2011. Pantaloon serves as the key

    anchor store, with a multiplex, food court and

    electronics major Ezone as other leading tenants.

    Another mall that is expected to commence operations

    during the second half of 2011 is Ramee Mall, aventure of Ramee Hotels having a leasable area of

    1,50,000 sq ft. The mall is integrated with a luxury

    hotel and Shoppers Stop spread over an area of

    45,000 sq ft acts as the key anchor tenant. However the

    mall suffers from other limitations like small size and

    limited retailer mix.

    The Chennai market observed an increase in rental

    values during the review period as compared to the

    second half of 2010, primarily across high street

    destinations. High streets such as Anna Nagar - 2nd

    Avenue, Velachery, Adyar and Alwarpet have

    witnessed rental appreciation in the range of 10-13%

    as compared to the previous review period. Rising

    demand level has been a key reason for the upward

    revision in rental values. However the closure of

    transactions has remained sluggish on account of thegap between the expectations of developers and

    retailers. While landlords are quoting higher rentals on

    account of enhanced demand, retailers are cautious of

    uptake at high rental values. Rental values are

    expected to appreciate in the range of 10% -15%

    across all the key high streets and occupancy levels are

    also likely to improve during the second half of 2011.

    Rental Trends

    Major Leasing Transactions

    Chennai Standalone 40,000 Shoppers Stop

    Chennai Standalone 12,000 Ekbote

    District Property Size (Sq ft) Tenant

    HIGH STREET RENTALS

    High Street Average Rental Average Rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Nungambakkam High Road 140 - 160 130 - 150

    T Nagar - Pondy Bazzar 140 - 160 140 - 150

    Anna Nagar - 2nd Avenue 90 - 130 90 - 110

    Velachery 80 - 100 70 - 90

    Adyar 130 - 160 110 - 150

    High Streets

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    Outlook

    The retail market in Chennai is expected tomaintain the positive trend over the next six

    months. This will be on the back of rising demand

    levels coupled with quality supply coming on

    stream. Therefore, rentals might witness an

    increment in a range of 10 - 15%, primarily in the

    CBD and Off CBD locations.

    In the organised retail segment, only Ramee Mall is

    expected to go operational in the second half of

    2011. Other major developments such as Phoenix'sMarket City and Marg's Junction Mall are under

    construction and the construction activity is rapidly

    picking pace. These malls are expected to become

    operational by 2012 or early 2013 and would

    contribute in changing the organised retail

    landscape in Chennai and may also lead to a

    rationalization in rental values.

    Hyderabad

    Market Summary

    The first half of 2011 has not witnessed any significant

    development in the retail market as compared to the

    second half of 2010. Banjara Hills and Jubilee hills in

    the prime city continued to dominate demand from

    leading retailers and witness healthy transactions as

    compared to other micro-markets in the city (with the

    sole exception of Himayat Nagar). Himayat Nagar has

    witnessed large number of enquires, especially from

    vanilla retailers, however, limited fresh supply has

    resulted in slow transaction activity in the micro-

    market.

    The emerging micro-markets of Habsiguda and A.S.

    Rao Nagar have witnessed an increase in queries fromretailers already present in other major parts of the city.

    Despite increasing demand, supply remained subdued

    in both these micro-markets, with a limited supply

    pipeline expected in the second half of 2011. An

    emerging micro-market, Banjara Hills Road No. 12

    witnessed limited transaction activity, mostly of small

    ticket sizes. This micro-market is expected to witness

    significant supply by the end of 2011. Some of the

    notable transactions on Banjara Hills Road No. 12

    were by retailers such as Ratnadeep Super Market, Yes

    Bank and Papa John's Pizza.

    Jubilee Hills Road No. 36 witnessed increased interest

    from new entrants on account of consistent supply of

    quality stock and presence of numerous brands in the

    micro market. New brands such as Gitanjali Jewellers

    (expected to get operational by July), Timberland

    (expected to start operations in the second half of

    2011), Value Line and EVOK are likely to enhance theattractiveness of this micro-market. Banjara Hills Road

    No.2 witnessed the store opening of leading Indian

    designer Rocky S, his first in Hyderabad.

    While Jubilee Hills is expected to witness fresh supply of

    almost 2, 00,000 sq ft in the coming few months, no

    fresh supply is expected during the year on Banjara

    Hills Road No. 2.

    In terms of organised retail clusters, fresh mall supply is

    expected to be slow due to sluggish construction

    activity. Post the commencement of Inorbit Mall in

    2009, there was a slight lull in the retail construction

    activity; the next mall likely to get operational is

    Manjeera Trinity in the second half of 2012. Besides

    this development, The Prestige Forum in Kukatpally is

    also expected to get operational in the first half of

    2013. Another mall which witnessed considerable pre-

    leasing activity during the first half of 2011 is SomaMall on RTC Crossroads. Although the project is still at

    ORGANISED RETAIL RENTALS

    Mall Clusters Average rental Average rental

    (Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Spencer Plaza 120-140 130 - 150

    Chennai Citi Center 140 - 180 140 - 200

    Ampa Mall 180 - 200 190 - 210

    Express Avenue 210 - 230 210 - 230

    Mall Clusters

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    a greenfield stage, the developer has managed to pre-

    lease substantial space to anchor tenants, including a

    twelve screen multiplex. The project is spread over 8,

    00,000 sq ft and is expected to become operational by

    the year 2015-16.

    There has been an increase of almost 3-5% in rental

    values across the high-streets of Banjara Hills and

    Jubilee Hills as compared to the second half of 2010.

    On the other hand, rentals in the micro market of

    Himayat Nagar remain stable during the review

    period. Rental values across the organized retail

    clusters also remained largely stable.

    Rental Trends

    Outlook

    While the Hyderabad market has witnessed an

    increase in queries and demand from retailers, this

    is yet to translate into actual transactions. The

    organised retail segment is likely to gain traction

    during the second half as pre-leasing has already

    gained momentum for malls that are ready for

    completion over the next two- three years. While a

    surge is expected in demand from vanilla retailers

    for high street spaces, the gap between the format

    sizes required by vanilla retailers (1,000-2,000 sq ft)

    and the available supply (average floor plate is

    4,000-5,000 sq ft) might not lead to the enquiries

    converting into transactions.

    Pune

    Market Summary

    Positive economic sentiment coupled with renewed

    retailer confidence has resulted in an increase in

    queries which in turn has led to significant absorption

    of space in high streets as well as pre commitment in

    upcoming malls. On the supply front, the city witnessed

    fresh supply of close to 500,000 sq ft as Inorbit Mall at Viman Nagar commenced operations. Another

    350,000 sq ft of space came on stream with the

    inauguration of Pulse Mall on Nagar Road. Inorbit Mall

    witnessed uptake by retailers such as Lifestyle,

    Shoppers Stop, Spar's, McDonald's, Spencers,

    amongst others. Pulse Mall on the other hand observed

    the opening of stores by retailers such as Evok, Bata,

    Benetton, Big Megamart, Reliance Trends, Reliance

    Timeout Corner and Croma. Market City, the 1.4

    million square feet mall had its soft launch after days of

    extensive publicity. The Mall is bringing to Pune for the

    Mall Clusters Average rental Average rental(Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Banjara Hills Road Nos. 1, 2 & 12 60 70 60 70

    Western Hyderabad 45-47 40-45

    ORGANISED RETAIL RENTALS

    Major Leasing Transactions

    RTS Cross Roads(CBD) Soma Mall 70,000 Cinepolis

    Kukatpally (SBD) NSL Centrum 30,000 Reliance Trends

    Chanda Nagar (SBD) Stand Alone 20,000 Reliance

    District Property Size (Sq ft) Tenant

    HIGH STREET RENTALS

    High Street Average Rental Average Rental(Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Himayat Nagar 105-115 105 - 115

    Jubilee Hills Road No 36 130-140 120 - 140

    Banjara Hills Road No 1 120-130 110 - 130

    Mall Clusters

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    first time premium international brands like Zara,

    DKNY Accessories, Alcott, Boggi, Diesel, Timberland,

    Jack & Jones, Veromoda and Only to name a few.

    Bund Garden Road witnessed the opening of the

    largest jewellery showroom in Pune by Tanishq, spread

    over an area of 12,000 sq ft. The micro market also

    observed retailers such as Reliance Digital and Honda

    taking up space. The Pinnacle Mall in Koregaon Park

    witnessed the opening up of Fiat's showroom. While

    most high streets as well as malls across the city were

    witnessing space uptake, Ganeshkhind Road has

    witnessed reduced demand from tenants with many on

    the verge of vacating the Kakade Center Port Mall on

    Ganeshkhind Road.

    The Eastern Corridor of Pune having seen substantial

    supply and absorption of organised retail space, most

    of the retailers are now eyeing to set up operations inthe Western Corridor of the city. Amidst the limited

    supply expected to hit the Western Corridor, the

    exciting and much awaited projects of the ICC Mall

    and the Westend Mall have commenced construction.

    In terms of high streets, rental stability was witnessed

    on MG Road, while renewed interest from retailers

    coupled as scarcity of supply led to stimulation in rental

    values across JM Road. Rental values at Aundhdeclined marginally as the micro market witnessed

    considerable retail churning with retailers such as Dass

    Electronics and Koutons shutting down operations.

    Rental values in Koregaon also maintained stability

    during the review period.

    Mall rental values have started witnessing downward

    pressure with rentals depreciating in the range on

    Ganeshkhind Road and Koregaon Park/Bund Garden

    Road in the range of 15-20%. This is primarily onaccount of high vacancy rates coupled with a huge

    supply pipeline over the next two years.

    Rental Trends

    Outlook

    Rental values will continue to appreciate in leading

    high street destinations as a sustained preference is

    being witnessed amongst leading brands for primecity locations. However, significant supply,

    specifically along the Eastern Corridor, might result

    into downward pressures on rental values. Amongst

    the key properties slated to get operational in the

    coming few months of 2011 include the Phoenix

    Market City Mall on Nagar Road, a mixed use

    property with commercial, retail and hospitality

    mix; besides the Plaza Center Mall on Kharadi

    Road. Both properties are expected to get

    operational in the second half of 2011 and add to

    the retail mall supply in the market.

    Major Leasing Transactions

    Viman Nagar Inorbit Mall 40,000 Spar

    Nagar Road Pulse Mall 20,000 Spencer

    Bund Garden Road Standalone 12,000 Tanishq

    Koregaon Park Pinnacle 6,000 Fiat

    Viman Nagar Inorbit Mall NA Lifestylez

    District Property Size (Sq ft) Tenant

    High Street Average rental Average rental(Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    MG Road 225-250 225 - 250

    JM Road 250-275 225 - 275

    Aundh 100-120 100 - 150

    Koregaon Park 100-150 100 - 150

    HIGH STREET RENTALS

    Mall Clusters Average rental Average rental(Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    MG Road 200-250 200 - 250

    Nagar Road 100- 140 120 - 160

    Koregaon Park/Bund Garden Road 100-140 130 - 170

    ORGANISED RETAIL RENTALS

    Mall Clusters

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    Kolkata

    Market Summary

    Rental Trends

    The Kolkata retail market remained steady in the first

    half of 2011, benefiting from the global economic

    recovery in 2010. There was no substantial fresh

    supply in the market and brands that had establishedtheir flagship stores in the city to gain access to the

    Eastern region of the country, are still gauging market

    response. South City Mall, Forum Mall/Forum

    Courtyard and City Centre continued to remain

    popular destinations, owing to the existing brand mix

    and favourable consumer response.

    During the review period, a number of international

    brands initiated operations in the city such as

    Timberland and FCUK (South City Mall), indicating ashift in consumer preference towards international

    brands. Many leading food & beverage outlets also

    ventured into the city with brands such as Coffee Bean

    & Tea Leaf (CBTL) launching its maiden cafe at Forum

    Courtyard and Spaghetti Kitchen launching its flagship

    outlet at Forum Mall.

    Retailers continued to remain optimistic about the retail

    prospects of Kolkata. This translated into growing pre

    leasing commitments by major retail anchors such as

    Lifestyle that booked space at the upcoming Spencer's

    Galleria on Syed Amir Ali Avenue. Hard Rock Cafe also

    announced plans of opening a 7,400 sq ft flagship

    cafe at The Park Hotel. Domestic retailers such as Cafe

    Coffee Day, Fastrack and Asmi continued to expand

    their presence through high street stores, while

    international brands continued to assess upcoming

    developments and supply at existing Grade-A malls.

    Vacancy levels across Grade-A malls remained low on

    the back of sustained demand and lack of fresh supply.Expected supply that was due to be operational in the

    first half of 2011, has been postponed further.

    Prominent Grade-A retail developments expected to

    make an impact on the retail map of Kolkata are

    Spencer's Galleria (Syed Amir Ali Avenue) and Lake

    Mall (Salt Lake).

    Rental values displayed a marginal increase acrossmicro-markets, led by sustained demand and lack of

    fresh supply. High streets witnessed rental appreciation

    in the range of 3-6%, with the exception of Camac

    Street and Shakespeare Sarani, which witnessed rental

    appreciation in the range of 8-9% as they cull favour

    with retailers due to high footfalls. In terms of

    organised retail, EM Byepass and Salt Lake observed

    rental appreciation in the range of 3-4%, while

    Jadhavpur witnessed an increase in the range of 11-12% as the micro-market is home to the South City

    Mall, which is popular amongst existing as well as new

    retail entrants to the city.. The adoption of the revenue

    sharing model by developers of existing as well as

    competing under construction malls is likely to help in

    keeping rental values in Grade-A malls range bound.

    Major Leasing Transactions

    Elgin Road Forum Mall 3,000 Spaghetti Kitchen

    Prince Anwar Shah Road South City Mall 2,500 Calvin Klein

    Syed Amir Ali Avenue South City Mall 1,800 Timberland

    Prince Anwar Shah Road South City Mall 1,400 FCUK

    Elgin Road Forum Courtyard 1,200 Tommy Hilfiger

    District Property Size (Sq ft) Tenant

    Mall Clusters Average rental Average rental(Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    E M Bypass 130-150 125 - 145

    Salt Lake 250-260 240 - 250

    Jadavpur 225-250 200 - 225

    ORGANISED RETAIL RENTALS

    HIGH STREET RENTALS

    Mall Clusters Average rental Average rental(Jan June 11) (July Dec 10)

    INR/sq ft/month INR/sq ft/month

    Park Street 280-310 270 - 300

    Elgin Road 190-210 175 - 200

    Camac Street,Shakespeare Sarani 190-210 175 - 190

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    Outlook

    The second half of 2011 is expected to remain

    optimistic for the retail market in Kolkata. With close

    to 0.8 million sq ft of retail space expected to come

    on stream in the near term, Kolkata is likely to

    witness a slew of new brands establishing presence

    in the city. Rentals are expected to move upwards,albeit at a steady pace. Steady demand will ensure

    that vacancy levels remain subdued. Significant

    churn is expected in ex ist ing Grade-A

    developments, as developers look to accommodate

    international brands that are exploring options in

    the market to introduce their innovative retail

    concepts.

    Mall Clusters

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    HyderabadCB Richard Ellis,211, Maximus 2B,Mindspace Cyberabad,Survey No. : 64 (Part),APIIC Software Layout,Madhapur,Hyderabad - 500 081T (91 40) 40335000F (91 40) 40335050

    INDIA OFFICES

    New DelhiCB Richard Ellis,Ground Floor, PTI Building4, Parliament Street,New Delhi 110 001T (91 11) 4249 0200 / 4239 0200F (91 11) 2331 7670

    ChennaiCB Richard Ellis,2C&D, Gee Gee Emerald

    151, Village Road,NungambakkamChennai 600 034T (91 44) 2821 4599 / 4571 / 4619F (91 44) 2821 4607

    BangaloreCB Richard Ellis,Hulkul Brigade CentreGround Floor, No. 82Lavelle Road,Bangalore 560 001T (91 80) 40740000F (91 80 ) 411 21239

    PuneCB Richard Ellis,705/706, 7th Floor

    Nucleus Church RoadPune - 411001T (91 120) 26055437/367/397/40190100F (91 120) 26055405

    India Retail

    About CB Richard Ellis

    CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company

    headquartered in Los Angeles, is the world's largest commercial real estate

    services firm (in terms of 2009 revenue). The Company has more than 31,000

    employees (excluding affiliates), and serves real estate owners, investors and

    occupiers through more than 300 offices (excluding affiliates) worldwide. CB

    Richard Ellis offers strategic advice and execution for property sales and leasing;

    corporate services; property, facilities and project management; mortgage

    banking; appraisal and valuation; development services; investment management;

    and research and consulting. CB Richard Ellis has been named a BusinessWeek

    50 best in class company three years in a row. Please visit our Web site atwww.cbre.com.

    CB Richard Ellis was the first independent international Real Estate consulting

    firm to set up office in the Indian sub continent. Over the last 16 years, the Indian

    operations have grown to a network of offices in all the major metropolitan cities.

    Today with over 2200 professionals, CB Richard Ellis is one of the leading Real

    Estate consultants in the Indian subcontinent. Please visit our website at

    www.cbre.co.in

    We obtained the information above from sources we believe to be reliable. However, we have not

    verified its accuracy and make no guarantee, warranty or representation about it. It is submittedsubject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale,

    lease or financing, or withdrawal without notice. We include projections, opinions, assumptions or

    estimates for example only, and they may not represent current or future performance of the property.

    You and your tax and legal advisors should conduct your own investigation of the property and

    transaction.

    KolkataCB Richard Ellis, Jindal Towers2nd, Floor, Block B

    Kolkata - 700017T (91 33) 40190200F (91 33) 40190230

    21/1A/3 Darga Road

    MumbaiCB Richard Ellis,#202/203, 2nd Floor,Naman Centre, G-block,Bandra-Kurla Complex,Bandra (E),Mumbai 400 051T (91 22) 40690100F (91 22) 26527655

    India

    Retail

    Ja

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