Owing to the low occupancy rates of malls, there have been no new additions to the market in the city for the last quarter (December 2011-March 2012). According to a survey conducted by the real estate ratings and research firm, Liases Foras, the total retail property stock across Mumbai was 14 lakh square feet at the start of December 2011 and it has remained the same at the end of the quarter.
Even the unit sales have been as low as 24 thousand sq. ft. when compared to cities such as Pune, which registered sales of 1.53 lakh sq. ft. of retail space. Hyderabad and Bengaluru also registered healthy sales with Bengaluru selling the most space at seven-lakh sq. ft.
“To build and operate a mall, large funds are required and presently, the big fund houses are not ready to take the risk of investing or lending to the retail sector since it has performed poorly in the past year and is too risky. Residential and commercial properties are a far safer bet,” said Pankaj Kapoor, managing director at Liases Foras.
“Developers are no longer rushing to build malls, as they have realised it is a completely different business with a different set of dynamics. They’re instead investing, or even converting the ongoing retail projects into residential properties,” said Mr Kapoor. Compared to the retail sector, the residential sector is adding around 10-lakh sq. ft.
In what may be a clear evidence of trouble for the sector, newly-inaugurated malls like The Phoenix Market City at LBS road, touted to be Asia’s largest, has a total occupancy of only 65 per cent.