Retail leasing recovering ground, Bengaluru tops activity in H2 2022: CBRE

Overall retail leasing across India grew by 5% on a half-yearly basis

Driven by demand from newly operational malls, Bengaluru recorded the highest retail space leasing in the second half of 2022, at 0.91 million square feet (mn sq ft), a latest report by property consultancy firm, CBRE, revealed on Wednesday.

“The Indian retail sector is recovering, and we anticipate that it will continue to gain momentum through 2023,” said Anshuman Magazine, Chairman and Chief Executive - India, South-East Asia, Middle East & Africa, CBRE.

Overall retail leasing across India grew by 5 per cent on a half-yearly basis at 2.43 mn sq ft, across key investment-grade malls, high streets and standalone developments. Supply on the other hand, grew by 129 per cent to one mn sq ft during the July - December period in 2022.

Although the period under review saw sales breach pre-pandemic levels, as shoppers returned to physical retail stores, after tapering of Covid-19, supply addition which witnessed a 69 per cent year-on-year decline failed to exceed the pre-pandemic mark.

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According to the report, pent-up supply is expected to become operational in the first half of 2023 and overall supply for the year is predicted to exceed pre-pandemic levels.

“Leasing momentum is expected to further pick up in January-June 2023 owing to anticipated space take-up in newly completed malls,” attested Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.

Fashion and apparel retailers continued to gain ground, accounting for over 42 per cent share in overall leasing. Other categories that drove leasing activity during the review period comprise food & beverage (~12 per cent), hypermarkets (~7 per cent) and entertainment (~6 per cent).

Bangalore, Delhi-NCR, Chennai and Mumbai cumulatively accounted for nearly 80 per cent of the overall space take-up during the last two quarters of 2022.

High streets rents surged by about 4-8 per cent across select locations in Delhi-NCR and Bengaluru, by 4-12 per cent in Ahmedabad and by about 1-3 per cent in Mumbai. Leading mall clusters in Delhi-NCR and Bengaluru registered rental growth of 3-15 per cent and 2-6 per cent, respectively.