Retail space absorption in Hyderabad has picked up pace after remaining subdued for years due to regional agitations and political uncertainty.
According to property consultants, more than half a dozen large retailers, including global brands H&M, Forever21 and GAP, and domestic players Reliance, Shoppers Stop and Central, recently agreed to absorb nearly 2.6 million square feet (sq. ft.) of retail space, giving momentum to a process started by global giants like Apple, Amazon and Uber over the last two years.
Property consultants attribute the spurt in commercial real estate activity to improved office market absorption – while MNCs like Apple, Amazon and Uber entered the city for the first time, existing players like Novartis, Deloitte and Accenture expanded operations.
Real estate services firm Cushman & Wakefield is of the view that Hyderabad, which is among the least-penetrated markets in India, will witness higher addition of retail space in 2017 and 2018, as compared with Mumbai and Chennai, in the form of large malls.
“Stable political environment post Telangana’s formation, coupled with the state government’s efforts to strengthen the city’s brand as an investment destination, has helped the city’s office and retail real estate segments,” said Veerababu, Cushman & Wakefield’s Managing Director for Hyderabad.
The developers planning large malls in the city are Phoenix, Preston Developers, Skill Promoters and GSM Infra, besides Larsen & Toubro which is building five large malls with an aggregate 2.3 million sq. ft. space as a part of transit oriented development for its Hyderabad metro rail project.
Veerababu said increased demand and inadequate availability of retail space has helped push up rentals of retail space in Hyderabad by a fifth to Rs 110-125 per sq ft. The overall retail realty space in Hyderabad is set to nearly double in two years to about 5.4 million sq. ft. from 2.8 million sq. ft. now, he said.
“Several malls were planned during the boom years, but for various reasons, the city didn’t witness many new additions after GVK One in 2007 and Inorbit Mall in 2008, with the only exception of Sujana Forum Mall in 2014,” Veerababu said.
Most of the new large malls are coming up in Hyderabad’s north-west quadrant in locations like Kondapur, Gachibowli and Chandanagar. Skill Promoters is building Hyderabad’s largest mall, City Capital Mall, in Kondapur covering 1.85 million sq. ft. area.
Large anchor tenants in retail realty space such as Shoppers Stop, Big Bazaar, Zara and Forever21 are picking up an average of 25,000-40,000 sq. ft. in the upcoming large malls, along with multiplex chains like PVR, Inox, Cinepolis and Satyam Cinemas, which are in expansion mode. According to property consultants, Big Bazar has booked about 80,000 sq. ft. of space in the proposed malls.
Confirming Future Group’s expansion plan, group chief executive officer Kishore Biyani, told ET: “We are expanding our footprint in Hyderabad by opening a new Central store and would be looking at expanding other brands as well.” Shrikanth Badiga, director with Phoenix, which is also building its large Lotus Mall in the city, said: “With increasing per capita income mainly due to exceptional run of the office segment, retailers are very aggressive on the Hyderabad market, fuelling demand for retail space.” Janne Einola, country manager for H&M, said the brand has booked 33,000 sq ft of retail space at Inorbit Mall to begin operations this summer.
Vivek Kaul, head of retail services, India, CBRE South Asia, said high streets are also mushrooming in most parts of Hyderabad, with national and global brands increasing their presence, helping increase investments by private equity and wealth funds into the country’s retail real estate market.