57 Ghost Malls in Top-8 Cities Are in Different Stages of Dilapidation: Knight Frank
Moneylife Digital Team 14 September 2022
Developers, who had jumped into the mall development business without understanding the demographics and demand, are biting their nails. In the past few years, many ghost malls have sprung up in the organised retail sector in India and almost 57 malls from across the country, are in different stages of dilapidation, according to a research report.
 
In the report, Think India, Think Retail 2022, Knight Frank India says, "These 57 malls comprise nearly 0.8 million (mn) square metre (sq m) or (8.4mn sq ft) in gross leasable space and all attempts to breathe life into these assets and attract a good retailer mix and footfalls have been unsuccessful. As a result, the revenue generation potential of such mall assets is far below the expected threshold." 
 
"While in some cases, termination notices have been served to shut down large format stores which comprised an entire mall, in other cases, discontinuation of operations, demolition of shops inside the mall premises and auctioning of the mall property due to non-payment of dues to the local mall authority are also underway," it added.
 
Due to multiple factors such as lack of due diligence, mall shortcomings such as size and ownership patterns, design issues, faulty layout with dark alleys, lack of customer walk flow management, low occupancy and lack of anchor tenants, some of the shopping mall assets developed in the golden era of mall development in India were in for a reality check by the dusk of 2008, when India was hit by the global recession. 
 
India has a total mall stock of 8.6mnsqmtr (million square metres) spread across 271 operational malls in the top eight markets—Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, National Capital Region (NCR) and Pune. As on first half (H1) of 2022, NCR contributes nearly one-third or 34% of India's total mall  stock—the highest across the top-8 markets.  Mumbai contributes 18% or the second highest mall stock to the top-8 markets, while Bengaluru contributes 17%, it added.
 
Further, the report says, with the arrival of competition from the opening of larger and swankier malls in the vicinity of nearby micro-markets, some of the old mall constructions, which had been doing well, may start languishing due to low footfalls. 
 
With community, learning, health and art as the core values, such development partnerships can become good examples of repurposed retail, Knight Frank says, adding, "Despite the historic shift to online shopping, this is a widely available opportunity to turn a big problem into a big asset. Repositioning such malls for aforementioned alternate uses represents a high impact opportunity through support from local communities."
 
The report cites a successful repurpose case study of Atria Mall located at Worli in Mumbai. "As a retail mall, the property became operational with high occupancy consisting of a good tenant mix. Despite attracting notable international brands across apparel, watches and automobile categories, the mall vacancy started climbing up. The property soon started dealing with poor financial economics."
 
"Located on an arterial road, the mall was initially positioned as a high-end retail property. The mall owners made changes to the mall layout and format, converting it into a full-scale retail destination. Since the catchment is strong, the opening of a cinema and entry of a French sporting goods retailer has helped the mall repurpose itself as a retail destination once again. It has attracted food and beverage and a mix of accessories and apparel retailers, amongst others. As regards its success, most of the property has already been leased and it enjoys good footfalls now," the report added.
 
Knight Frank also remains optimistic about the recovery in retail consumption. It says, "After facing a series of lockdowns and disruptions in consumption due to the COVID-19 pandemic, the retail industry seems to be back on track with consumption crossing or about to reach pre-pandemic levels across regions."
 
According to the report, in March 2022, all categories, except accessories, had already surpassed pre-COVID-19 level sales. "Over the last four years, electronics outperformed in sales growth even during COVID-19 hit periods, primarily driven by the work-from-home trend and consumers opting for premium products. The categories of food and beverage (F&B), apparel and department stores show healthy recovery after the third wave as consumers return to the 'old normal' way of shopping." 
 
"The growth in consumption across regions and categories as normalcy returns, is a huge relief for retailers and will help them to meet their contractual obligations with mall operators eventually,” it says. 
 
Knight Frank feels that over the next five financial years, the retail industry will continue to account for 10% of India's gross domestic product (GDP). "Per Knight Frank Research organised retail sales volume is estimated to grow at a compounded annual growth rate (CAGR) of 17%, from US$52 billion (bn) in FY21-22 to US$136bn by FY27-28."
 
By FY22-23, it estimates the potential consumption to cross pre-COVID-19 levels reaching US$11bn. Knight Frank sees potential consumption in malls across the top-8 cities to grow at a CAGR of 29% in the FY21-22-FY27-28 period reaching US$39bn by FY27-28. 
 
"This high growth of revenue in shopping malls is largely projected due to increasing mall supply in the next six years coupled with the sustenance of rising consumption demand. Entry of new brands in the market, changing demographic profiles and evolving consumer tastes and preferences are expected to sustain this growth in consumption. The long-term outlook of the mall business in India continues to remain promising for the next few years," it added.
Comments
vekbhardwaj
3 weeks ago
In map why NCR mall info is in China . The Chinese may lay historic claim to such ghost malls .
gbrhyd
3 weeks ago
I don’t think mall business will flourish in future, due to the on-line marketing, like Amazon, JioMart etc.
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