Shopping mall developments have slowed down as the developers avoided opening new malls owing to prolonged gestation periods, slow rental growth and lack of prime land parcels.
According to data compiled by property consultant JLL India, of the total 74 builders which were active in retail real estate in 2005, only five still continue to build such spaces. Besides, as per the data the share of retail development in overall commercial space has fallen to 22 per cent from 41 per cent in 2009.
During 2005-08, before the global financial crisis hit, 74 developers launched retail projects across the country, encouraged by the robust economic activity during the period. The number gradually slipped to 63 in the 2008-11 period, and during 2012-16, only 45 developers completed their retail projects. However, in all these three phases, only five developers have consistently performed and delivered premium shopping malls, says Ashutosh Limaye, head of research, JLL India.
Some of the top developers which have continued in the retail business since before the global financial crisis are DLF, K. Raheja and Phoenix Mills.
Post global financial crisis, there was a consolidation mode and so the business model was shifted to leasing rather than doing strata sale. The holding and controlling the asset for superior customer experience and tenant is the way forward has been knownsays Pushpa Bector, executive vice-president and head, premium malls, DLF Utilities.
Announcements of new projects have been very slow. Most of the projects which were launched in the last seven to eight years are largely the projects which were announced in 2004-05. It’s largely to do with non-availability of land parcels and good infrastructure connectivity, says Mahajan.
Mahajan also added that the long gestation period of around 8-10 years to build and turn around a mall also makes the business unviable for most developers.