Delhi retail leasing volume drops 28% in Q1 

Limited availability of space dragged mall leasing during the quarter.

According to a report from Cushman and Wakefield, Delhi-NCR received close to 0.26 MSF of leasing across both malls and main streets in Q1-24. The leasing volume in Q1 saw 35% drop compared to the immediately preceding quarter, and a 28% decline compared to the same period last year. 

“Mall leasing comprised the bulk of the volume with 0.18 msf of leasing activity. Limited availability of space resulted in a 23% q-o-q decline in mall leasing during the quarter. The last time this city witnessed a new supply of mall was in Q1-23, post which no new supply has hit the market so far,” the report said.

Here’s more from Cushman and Wakefield:

Majority of leases in malls during the quarter were attributed to new space stake ups, comprising 52% share. During Q1, the fashion segment emerged as the primary driver of demand, capturing a 41% share, followed by accessories & lifestyle with 25%. The F&B sector, which usually dominates the demand with 15 – 20% share since the past 5 years (2019 – 23), saw a decrease to merely 9% in Q1-24. 

The city received approximately 0.08 msf of leasing activity across prominent main streets during Q1-24, a significant 52% decrease from the previous quarter's historic high volume, although a moderate 7% drop on a y-o-y basis. Mainstreet demand remains consistent, though, with the average volume seen in the past 8 quarters.

The F & B category dominated across main streets with a 40% share, followed by fashion and CDIT segments with 20% and 14% shares, respectively. Delhi NCT (national capital territory) emerged as the primary market for main street leasing, capturing a dominant share of 69%, with South Delhi zone alone accounting for a 26% share, followed by East Delhi zone with 19% share. 

No new mall supply during the quarter; vacancy dips marginally 

Mall vacancy rate in Delhi NCR stood at 15.6% during Q1 2024, down by 50 basis points when compared to the same period a year ago. There were no new completions during Q1 2024 as slippages in project timelines have occurred with few upcoming supply. However, for the current year, we anticipate about 1.0 msf of new mall supply that could help absorption volumes improve significantly. 

Mall rents largely remain stable; select main streets witness rental growth 

Mall rentals in Delhi NCR remained stable during the quarter. Prime main streets of Gurugram (Galleria Market) witnessed a 5% growth on y-o-y basis, whereas South Delhi markets such as South Extension and Lajpat Nagar witnessed a 7-10% growth on y-o-y basis. Other prime main street markets such as Khan Market, Rajouri Garden, Greater Kailash and Noida Sector 18 remained stable on a q-o-q basis as well as y-o-y basis.