APPD Market Report Article

Bengaluru

August 26, 2022

Dr Samantak Das, Head of Research, India & Sri Lanka

1.4%

INR 190

Rents
Rising

Steady demand for organised mall space

  • Footfall has reached nearly 90-95% of pre-COVID-19 levels, prompting the reopening of brick-and-mortar stores. The relaxation of COVID-19 curbs (following the third wave in January) has resulted in consumers frequenting recreational centres such as malls and high streets, driving recovery of store openings and retail sales.
  • Quarterly leasing activity in the city was led by F&B, multiplexes and electronic retailer segments. PVR, West Side, Reliance Trends, and Reliance Smart among others, were anchors and vanilla retail brands that took up space in the recently completed Salarpuria Sattva Divinity Mall.

One new mall opens in 2Q22

  • Salarpuria Sattva Divinity Mall at Mysore Road in the suburbs submarket became operational in 2Q22, adding 0.25 million sq ft to the retail stock in the city. The total retail stock of the city now stands at 13.84 million sq ft.
  • VR Arena mall and Falcon City mall on Kanakapura Road, Phoenix Mall of Asia in Hebbal, SBR Keerthi Mall on the Old Madras Road, and SBR Lucky Mall on Electronic City Phase 2 are among the upcoming projects in the suburbs in 2023.

Rents and capital values remain unchanged

  • While rents across malls were largely steady, due to new completion in the suburbs, the weighted average city rents showed a q-o-q decline of 0.8%. The recent influx of new supply at reduced rental rates has significantly contributed to the downward trend in overall rents.
  • Capital values were also unchanged during the quarter across malls, with overall market yield stable at 11.2 percent.

Outlook: The retail market expects to make a full recovery

  • With footfall expected to return to pre-COVID-19 levels, barring any exigencies, physical retail is well on its way to a full recovery. From 2023 onwards, the proportion of stock in lower-rent suburbs will rise in comparison to prime city and secondary submarkets.
  • The overall capital value increase is expected to be higher than rental growth, supporting yield compression of 20 basis points y-o-y.

Note: Bengaluru Retail refers to Bengaluru's overall prime retail market.

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