, India

New Delhi retail property sector ends 2021 on a high note

New leases and store openings hit 0.28m sq ft in Q4.

Delhi NCR’s retail sector ended 2021 with healthy transaction levels. Data from Cushman & Wakefield reveal that new leases and store openings in malls were recorded at 0.28 msf in Q4 as retailers opened new stores in some of the recently completed developments along with few store relocations. 

Moreover, main streets recorded new leases and store openings of close to 0.08 msf across prominent markets including DLF Galleria, Connaught Place, Punjabi Bagh, Kamla Nagar among others. 

Here’s more from Cushman & Wakefield:

Retailers opened new stores on the back of a pick-up in market sentiments and resumption of business activity after the second wave. Accessories & Lifestyle was the most active retailer category in Q4 with traction coming from retailers such as Decathlon, Orra, Titan Eye Plus among others. 

Pent-up demand by consumers and improving economic outlook can be attributed to the bounce-back in consumer sentiments and the resultant leasing activity by retailers. Hypermarket and F&B were the other leading retailer segments with new store openings across the city in the quarter. DMart, Chaayos, Baskin Robbin’s, Blue Tokai, The Big Chill Cakery were active retailers in these categories. 

Athleisure brands including Adidas, Nike, Puma, Skechers took the limelight during the year with continuous expansion of their space footprint across main streets and malls in multiple locations. The festive season brought cheer to the city’s retail spaces with prominent malls recording 70 - 75% footfalls of the pre-COVID levels during weekends, resulting in improved sales activity. Multiplexes continued to face challenges with limited audience despite resumption in business. 

Going forward, foot traffic in malls and main streets is likely to be impacted in 1Q2022 due to restrictions being imposed in the city to curb the rising infections in the wake of Omicron variant. 

No new supply added in Delhi NCR, vacancy levels decline 

In the absence of any new supply addition during Q4, the city’s mall inventory remained at 27.1 msf as at end-2021. Vacancy level declined by 54-basis points with leasing activity in some of the newer mall developments along with additional space take-up by retailers in some other malls. The overall vacancy of 16.04% at the end of Q4 is expected to decline amidst rising demand and with limited space addition planned for the next year. 

Improving business conditions keep rentals stable during the quarter 

Satisfactory recovery in business activity with shoppers returning led to mall owners reducing their accommodative stance on rentals. Rentals have been gradually inching up towards pre-COVID levels. Fresh restrictions on business, especially F&B dine-in and Entertainment, and expectation of subdued footfalls in the early months of 2022 are likely to initiate conversations around temporary waivers.

However, with vaccinations in place and severity of disease declining, the impact on business activity is expected to be short-lived. Learnings from the pandemic’s impact on business over the last few quarters are likely to govern negotiations between retailers and landlords in the best interest of stakeholders. More revenue-share arrangements between retailers and landlords are expected in the coming quarters.

However, business outlook remains positive for the medium term for the city’s retail spaces as temporary periods of lull are balanced with heightened activity in subsequent months due to pent-up demand or ‘revenge shopping’ by customers.


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