Retail space supply declined 83 percent in 2012 against 2011 as developers focused attracting tenants in completed properties and reducing existing vacancy levels, a new study by global property consultant CBRE showed.
Even though retailer enquirers have increased post the government allowing FDI in the retail space, only 2.5 million square feet of retail supply hit the markets in 2012 against 15 million square foot in 2011.
"Despite the large dip in prime retail space supply across key cities last year, the good news is that retailers continued with their expansion plans," said Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd.
National Capital Region, which saw the maximum supply in 2012, saw rentals in high streets of South Extension and Basant Lok fall by 13-14 percent and 22-24 percent, respectively; while rentals in Khan Market and Cannaught Place remained stable.
However in organised retail, rentals in Saket and Vasant Kunj Malls were stable but Noida and Gurgaon saw an increase in value by around 11 to 13 percent due to limited quality supply and high demand levels, the report said.
" The impact of opening up of FDI in the sector is also likely to have a ripple effect as international retailers continue to evaluate conditions imposed in the new FDI policy," said Magazine.
In Mumbai too, prime locations like Colaba Causeway and Kemps Corner witnessed a decline of around 4-6 percent, while Linking Road in Bandra and Khar appreciated by 5 to 6 percent due to interest from leading international luxury brands like Elle, Blackberry, VIP.
Bangalore's commercial St and New BEL Road too saw a correction of about 8 to 10 percent, while values in Brigade Road dipped by 17-18 percent.