Delhi- NCR records 65% Y-o-Y growth in retail leasing Jan–Jun’23: CBRE report 

New Delhi, August 17, 2023 – CBRE South Asia Pvt. Ltd., on Thursday announced the findings of its report, ‘India Retail figures H1 2023’. The report highlights real estate growth, trends, and dynamics across the retail sector in India. 

According to the report, Delhi-NCR recorded an increase in retail leasing by 65% Y-o-Y across investment-grade malls, high streets and standalone developments in Jan-June’23. Total leasing during this period stood at 0.70 mn. sq. ft. compared to 0.42 mn. sq. ft. in the corresponding period last year. The city recorded a supply of 0.22 million sq. ft. during Jan-June’23. During this period, among the industry segments in Delhi-NCR, fashion & apparel players drove leasing with a share of about 47%, followed by luxury (13%), and food & beverage (8%). 

Key leasing transactions recorded in the city were:

On a pan-India basis, retail leasing witnessed a 24% Y-o-Y growth in the Jan-June’23 period, and a 15% increase compared to Jul-Dec’22 period. Total leasing during Jan-Jun’23 stood at 2.90 mn. sq. ft. compared to 2.31 mn. sq. ft. (Y-o-Y). Bangalore, Delhi-NCR, and Ahmedabad collectively accounted for a cumulative share of 65% in leasing activity during the first six months this year. The Jan-Jun’23 period also recorded a 148% Y-o-Y increase in supply. Total supply in Jan-June’23 stood at 1.09 mn. sq. ft. compared to 0.44 mn. sq. ft.(Y-o-Y). Further, boosted by the increased appetite of shoppers, the top eight cities saw an 8% growth in mall completions on a half-yearly basis. Ahmedabad led the growth in supply addition with a 73% share, followed by Delhi-NCR at 20%.  

Recognizing the immense potential of the consumer market in India, international brands continued to reinforce their presence in the country. Apple launched its first two new stores in Mumbai & Delhi-NCR and UK based coffee and sandwich chain Pret A Manger also opened stores in Mumbai and Delhi-NCR. Canadian coffee brand Tim Hortons which debuted in India last year, strengthened its presence in Delhi-NCR and Punjab and entered the Mumbai market this year. European luxury brand Balenciaga is set to open its first brick-and-mortar store in Delhi-NCR through its partnership with Reliance Brands. Additionally, Galeries Lafayette, a leading shopping centre based in Paris, is also set to establish its presence in India by opening two stores in Mumbai and Delhi-NCR in collaboration with Aditya Birla Fashion and Retail Ltd. 

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Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “Despite global headwinds and looming uncertainty, India is poised for strong economic growth and sustained recovery during the endemic stage. Retailers have expressed positive leasing sentiments, indicating their strong interest in establishing new setups, expanding operations, and upgrading existing stores. The leasing performance displayed positive trends on a half-yearly basis as well, exhibiting a 15% rise in space take-up compared to 2.49 million sq. ft. of leasing recorded during H2 2022.  Going forward, the anticipated growth in mall supply coupled with encouraging consumer spending trends, especially during the festive season, is expected to further augment the sentiment for expansion among both international and domestic retailers who are well positioned in the market”.

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “The retail leasing market presented notable trends and opportunities in the first half of the year. Retail leasing is expected to touch 5.5 – 6.0 million sq. ft. in 2023, the highest level after the 2019 peak of 6.8 million sq. ft. It is expected that primary leasing in newly completed malls would remain the key driver of retail space demand in 2023. Led by strong demand for quality retail space, rental values increased on a half-yearly basis in select micro-markets across most cities. Additionally, tier-II cities are expected to gain greater traction as retailers recognize the potential of these markets”.

Retail trends shaping up in 2023

Prime assets will continue to gain traction: Strong flight-to-quality demand will continue to prompt retailers to seek high-quality retail spaces in city centres and along prime high streets. While decentralised properties will also continue to attract interest, we expect assets in prime locations to outperform in 2023. Cost-sensitive retailers are likely to seek opportunities to add new stores in secondary locations.

Experience to remain at the helm of retailer strategies: The retail equation is more evolved than ever, with the elements of experience, leisure and customer-centric strategies gaining greater significance. Experiential retail has emerged as a compelling response to the prevalent accessibility of e-commerce, offering a strategic avenue for brands to optimize their physical presence and yield substantial returns by prioritizing immersive and engaging in-store experiences.

Retail supply chain optimization to become a new normal:  As the final 50 feet remains one of the most expensive legs of the logistics journey, retailers can thus hedge against rising transportation costs by assigning a more active supply chain role to their brick-and-mortar stores. As consumers increasingly expect to be able to shop for any product, any time, retailers will not only look to manage their expectations in-store but also upstream throughout the supply chain. 

Retailers will continue to explore tier II, III and IV markets: Population with increased spending potential, smart city recognition by the government, developing infrastructure and airport connectivity, availability of land and successful brand launches in tier II, III and IV markets are some of the factors that are elevating preference for these markets. The surge in online shopping during the pandemic led stakeholders to move operations closer to the end-user markets. India’s transition into an organized retail market will be driven by the continued growth in these cities and it will become vital for retail stakeholders to harness their economic and development potential.

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