By Santhosh Kumar
Here's a look at Delhi's best and worst performing real estate in 2012.
Delhi NCR Commercial Real Estate 2012
Best Performing Areas
In 2012, Sohna Road in Gurgaon saw very high levels of office space leasing and absorption due to its affordability. Many comparable options in terms of quality were at significantly higher price points (with rentals above Rs 70/square foot). The good quality of office property supply and attractive rentals in the range of Rs 30-40/square foot worked in Sohna Road’s favour. Its appeal as a business destination was magnified by the presence of good retail developments in the vicinity and the availability of comparatively affordable, ready-to-move residential options.
DLF Cyber City withstood all challenges and continued to build on its reputation as the most sought-after location for leading businesses in the NCR belt.
The location’s USP of being a neighbourhood populated by leading MNCs was sufficient incentive for many leading international corporates to choose this location for their office space requirements.
The available options came at significantly high price points (above Rs 70/square foot). However, DLF Cyber City rode tall on the prospects of the impending infrastructure upgrade in the form of the soon-to-commence rapid metro services and road improvements.
In Delhi, Saket was the unchallenged hotspot for office space leasing in 2012. This area saw a healthy supply and absorption of office real estate, despite significantly higher rentals. The factors that worked for Saket were: Its existing status as one of the most happening and developed locations in Delhi, excellent connectivity to the rest of Delhi and Gurgaon/Noida and high quality of office property supply
Worst Performing Areas
In terms of office space absorption, the following locations performed rather badly in 2012
NH8 (beyond Rajiv Chowk)—Though office space supply and affordability weren't a problem, supply there failed to be absorbed because of poor connectivity. The inferior road infrastructure caused alarmingly high levels of traffic congestion, compounded by frequent waterlogging.
Golf Course Extension —This area had limited supply which nevertheless saw low levels of absorption because of this region’s lack of ready-to-move in residential options. Most of the residential supply in this area was under construction in 2012, resulting in negative decision by corporates in terms of leasing office space there.
Greater Noida and Sector 62 — These regions in Noida definitely took a back seat in terms of office space absorption in 2012. Sector 62 suffered because of its distance from CBD. Although it had ready supply and rentals were affordable and promising when compared to other options, the difference in price points was not cause the supply there to overrule the options available in other prime locations of Noida (such as Noida Expressway and CBD, which offered multiple advantages in terms of good quality supply and better locations) even though the price points in these areas were higher.
Greater Noida was also unable to perform because of the existing supply of quality office spaces along Noida Expressway. Most of the absorption was more or less along the Expressway till Sector 142.
Delhi NCR Retail Real Estate 2012
In 2012, the prospects for retail real estate in Delhi NCR were marred by a very little new supply, and the inferior quality of the supply that did exist. Almost all the current malls in NCR are older than half a decade or more. Nevertheless, some of the prime malls continued to perform and even picked up in comparison to 2011.
However, most of the existing malls performed poorly in 2012, owing to poor location, inferior mall management, lack of aggression in brand churning, etc. Quality retail space witnessed decent levels of absorption with little vacancies, while poorer quality retail space could not be absorbed.
The Best Performers Of 2012
In South Delhi, the best-performing malls of 2012 were Select City Walk at Saket and DLF Promenade and DLF Emporio in Vasant Kunj. In West Delhi, Pacific Mall was the sole performer among a number of others shopping complexes. In East Delhi, Shipra Mall and Mahagun Mall showed encouraging performances. The Great India Place (GIP) continued to be the star performer in Noida, while Ambience Mall was the only centre that could distinguish itself among the huge supply of malls in Gurgaon.
Most of these malls have been performing consistently well and have a lot in common that can be attributed to their success.
Professional mall management: All these malls have professional and extremely efficient mall management teams that closely monitor the day-to-day operations and take crucial strategic decisions.
Good brand / tenant mix: Regular churning of brands, or inclusion of leading brands and expulsion of non-performing brands, enables these malls to maintain their appeal and viability.
Ownership: All these malls are developer-owned malls and not strata titled. This enables the mall owners / developers to exercise full control on mall operations and functioning and to target the best-suited brands.
Revue sharing: Manny of these malls have shown consideration in their rentals and have started to offer the revenue share model, which is a win-win situation for both the developer and the brand. On one hand, it increases the affordability of spaces and on the other, delivers optimal revue to the developer for performing brands.
Positioning: All performing shopping centres in 2012 were able to uniquely position themselves as premium / luxury malls within catchments that cater to the affluent section of society. Their massive size and strategic locations, coupled with good connectivity and access, were also critical factors.
F&B, Leisure: The food and leisure options that these malls offer were distinct differentiators, leading to consistent and increasing footfalls.
Thanks to these factors, none of the mentioned malls saw any vacancy at all in 2012 – and, in fact, have a long queue of brands lined up for entry.
The Worst Performers Of 2012
Without actually naming them, most of the malls in West Delhi, North Delhi, Gurgaon and Noida performed badly in 2012, with marginal or no improvement in absorption levels. Some of these malls are strata titled properties in which the developers have sold the units to investors whose decisions are governed solely by capital gain, with no regard to what works best for the mall. This resulted in very minimal decision powers of developers. These malls had a poor tenant mix, with no brand churn. Most of these malls are not professionally managed.
Malls in North and West Delhi, and also some in Gurgaon, could not perform due to oversupply, poor quality, lack of strategic location and no USPs with which to position themselves.