Delhi sees 0.22msf of new retail supply in Q1

One new mall hit over 90% occupancy within its first few months of operations.

According to Cushman and Wakefield, new retail supply of 0.22 msf entered Delhi NCR market during Q1 2023, with the addition of one new mall in South Delhi called Pacific Premium outlets. 

The mall, which claims to cater to brands that qualify as “bridge to luxury category”, has managed to achieve over 90% occupancy within the first few months of commencing operations. 

Here’s more from Cushman and Wakefield:

The fashion and apparel segment had the highest share of store openings, accounting for 51%, followed by food & beverage segment (24% share) and entertainment sector (22%). 

Majority of leasing activity during Q1 2023 was fresh leasing, which led to marginal drop in city-wide mall vacancy levels by 50 bps, bringing the overall vacancy levels in Delhi NCR to 16.1%. Superior quality malls continue to enjoy much lower vacancy levels of around 4-6%. 

For the rest of 2023, an estimated supply of 0.82 msf is expected to be added to the NCR market. This should help keep rentals largely range bound and vacancy levels may witness a marginal increase. 

Retail leasing remained healthy in Q1, mostly driven by fashion & apparel 

Delhi NCR saw retail leasing activity of approximately 0.36 msf in Q1, which was in line with the previous quarter's activity, and a 29% increase compared to Q1 2022. In terms of mall leasing, there was approximately 0.27 msf leased during the quarter, which represents a 11% increase compared to the same period last year, although an 8% drop compared to the previous quarter. 

New leases were the primary driver of quarterly mall leasing activity, accounting for 97% of the total share, as occupancy increased in recently completed developments. The fashion & apparel segment contributed the most to mall demand, with a 39% share, followed by the F&B segment with a 35% share and the entertainment sector with a 19% share.

Main streets in Delhi NCR witnessed leasing activity of approximately 0.09 msf in Q1 2023. Submarkets such as Rajouri Garden, Connaught Place,and Lajpat Nagar saw the highest activity during this period. The accessories and lifestyle sector accounted for 29% of the quarterly leasing activity. The food & beverage segment followed, with a 17% share and the fashion & apparel sector accounted for 15% of quarterly leasing. 

Mall rentals mostly stable; some main streets record rental growth 

Mall rentals in Delhi and Gurugram remained stable during Q1 2023. However, Noida saw an increase of 10-12% on a qoq basis. As the retail market inNoida continues to grow and the demand increases, the gap between Noida and other NCR malls is gradually narrowing. 

In terms of main streets, prime markets like South Extension and Khan Market in Delhi saw rental growth of 5-7% on a qoq basis. Rentals across other main street markets like Rajouri Garden, Greater Kailash I, Connaught Place, and DLF Galleria in Gurugram remained stable on a qoq basis but witnessed an increase of 10-12% on a yoy basis.