APPD Market Report Article

Bengaluru

February 28, 2022

0.8%

INR 188

Rents
Rising

Net absorption at a 39-quarter high

  • Even as demand makes a steady recovery in malls and high streets, two new completions aided in taking the quarterly net absorption to a record high for the last 39 quarters. Retailer demand was also aided by the impetus from steadily raising footfall over the course of the quarter.
  • Brands in the apparel athleisure, F&B, hypermarkets and home furnishings segments were active during the quarter. Some key brands which took up space in the new completions included Smaash, Zudio, KFC, Pizza Hut, Titan, Calvin Kelvin, Tommy Hilfiger, Super 99, BIBA, Crossword, Bodycraft, Bata, Van Heusen, etc.

Two new malls come on stream in the quarter

  • Lulu Mall at Okalipuram in the Prime submarket and Bhartiya City Mall at Thanisandra in the Suburbs submarket opened in 4Q21, the only two mall completions recorded in 2021. They totalled 1.59 million sq ft of retail space which took the total retail stock of the city to 13.39 million sq ft by end-2021.
  • There is a healthy supply pipeline for the upcoming quarters, with one project in Prime City and another in the Suburbs lined up for 2022. All the remaining forecast supply is lined up for the Suburbs.

Overall rents and capital values up on account of new completions

  • Overall city level rents were up by 5.3% q-o-q, the rise largely attributed to the new completions in the Prime City at higher rents. Rents also rose slightly in the Suburbs submarket given the higher catchment and interest from retailers.
  • Overall capital values rose by 7.2% q-o-q gaining from the completion of quality assets.

Outlook: Completions and sentiment recovery key to further demand

  • With the new Omicron variant, the state government has already issued new guidelines for shopping malls, movie theatres and restaurants to operate at 50% capacity in the short term. This is likely to have an adverse impact on the recovery currently underway and may also see retailers putting expansion plans on the back burner.
  • We expect that retailers will remain very cautious but confident in the future of physical retail, focused mainly on good quality developments.

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

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