India is destined to Gain Larger Malls With Retail demand and Investor Interest

By Consultants Review Team Wednesday, 29 November 2023

The mall space in India is likely to rise by 30-35 million square feet (MSF), or more than one-third of the current stock, during the next 3-4 years, according to a release from rating agency Crisil on Wednesday. It stated that the retail recovery is projected to continue as broad-based consumption across geographies and sectors strengthens demand resilience. "In fact, revenue of mall owners for this fiscal year is estimated at 125 percent of the pre-pandemic level," he stated.

Another element driving up demand for mall space is an increase in consumption in tier 2 cities. According to the statement, these cities will account for around 25% of the total future mall area. The mall's growth has also been attributed to increased interest from investors such as private equity, global pension funds, and sovereign wealth funds. According to Crisil, these investors will lead 15-20% of new supply investment.

"Malls are expected to attract more than Rs 20,000 crore of investment over the next 3-4 years," said Crisil Ratings director Anand Kulkarni. "The reasons for the significant increase in supply are twofold: one, the resumption of work on new supply, which was halted during the pandemic due to uncertainty about the timeline of recovery." And two, strong retail sales in malls, resulting in great operating performance for mall owners in both the current and past fiscal years."

"Sales in top malls have increased dramatically post-pandemic, and retailers are expanding aggressively." According to Pankaj Renjhen, chief operating officer and joint managing director of Anarock Retail, even online companies are increasingly embracing brick-and-mortar shop layouts. "As such, we have every reason to expect major growth on all fronts, both in terms of supply and absorption of Grade A malls across the key markets." 

Malls in India are also seeing high occupancy as retail demand returns.

"Mall owners are expected to report a second consecutive year of high performance this year, with revenue growth of 7-9%, following last fiscal's robust 60% growth." This robust performance has enabled malls to maintain healthy occupancy levels of 95%," stated Saina Kathawala, associate director at Crisil Ratings.

According to Crisil, despite large capital expenditure (capex) plans, mall owners' credit risk profiles would remain steady due to robust investor interest and solid balance sheets. The debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is forecast to be three times this year, up from 3.2 times last year.


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