APPD Market Report Article

Delhi

August 26, 2022

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

0.0%

INR 258

Rents
Rising

Net absorption declines by 41% q-o-q

  • Net absorption decreased by 41% on a q-o-q basis as no new retail developments were completed in 2Q22, but was up by 186% y-o-y. The prime south submarket saw good leasing momentum, with international brands like H&M Home and Tim Hortons leasing space in prominent malls to open their first stores in the country.
  • In the prime submarket (others), a good number of transactions were recorded in Pacific malls at Subhash Nagar, Dwarka and Netaji Subhash Place. In the suburbs, leasing activity remained strong. In Noida, Madame Tussauds took up a large space in the DLF Mall of India. In Gurgaon, Sanspareils Greenlands opened its first store in MGF Metropolitan mall.

No new malls complete in 2Q22

  • No retail developments were completed in 2Q22. There are many upcoming mixed-used developments with retail blocks as a major part of the development.
  • In 2H22, 0.78 million sq ft of retail developments are expected to complete.

Rents remain stable

  • Rents remained stable across Delhi NCR malls. In future, rents are expected to go up in quality shopping malls with lower vacancy levels.
  • In 2Q22, vacancy declined marginally by 20 bps q-o-q to 16.6% with leasing activity picking up. Brookfield Properties acquired a stake in Bharti Realty’s mixed used project, Worldmark at Aerocity, Delhi, and Worldmark 65 at Gurgaon.

Outlook: Retail market to improve further by year end

  • Leasing activity is expected to increase in the coming months with new supply coming in. In 2H22, more than 0.78 million sq ft of supply is expected to complete, with the majority in the suburbs. Leasing activity is expected to touch pre-pandemic levels with many brands expanding their footprint.
  • Refurbishment of existing malls is also expected, in order to command fair market rents. Rents are expected to increase marginally, with vacancy levels going down along with an inflow of new retail brands. Leasing activity and demand are subsequently expected to pick up with new mall completions.

Note: Delhi Retail refers to Delhi NCR's prime retail market.

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