The physical retail continues to gain prominence among Indian shoppers despite the continued growth of online retail. As a result, strong footfalls led to expansionary space take-up by domestic and international retailers, especially during July-December 2022, according to a report by real estate consultant CBRE.
“The retail leasing activity surged by 5 per cent to 2.43 million sqft in July-December 2022 as against 2.31 million sqft reported in the January-June 2022 period. Overall, in 2022, leasing activity in the retail sector grew by 20 per cent y-o-y to 4.7 million sqft,” CBRE said in the report, titled ‘India Retail Figures H2 2022’.
It added that international brands such as Tim Hortons, Victoria’s Secret, and Uniqlo continued to expand during July-December 2022, despite global headwinds. As Tier-II cities continued to gain popularity, Uniqlo opened its first store in Chandigarh, Tim Hortons entered Ludhiana, and Starbucks, Biba, and Shoppers Stop opened in Dehradun.
“During the second half of 2022, the American home furnishings shop chain Pottery Barn forayed in Delhi-NCR, opening two stores in rapid succession. Adidas opened their largest experience store in Delhi-NCR, and Zara, Nike, and Azorte are among the other companies that have launched experience/ flagship stores with a wide range of tech and other services in the city,” CBRE said in the report.
It added that fashion and apparel retailers continued to expand their footprint, accounting for a share of more than 42 per cent in overall leasing in Jul-December 2022. Other prominent categories that continued to drive leasing activity during July-December 2022 included food and beverage (12 per cent), along with hypermarket (7 per cent) categories.
The entertainment category, which was impacted the most during the pandemic, also emerged as one of the top demand drivers during July-December 2022 with 6 per cent share in overall space take-up.
Anshuman Magazine, chairman & CEO (India, South-East Asia, Middle East & Africa) of CBRE, said, “The Indian retail sector is recovering, and we anticipate that it will continue to gain momentum through 2023. Even amid difficult global economic conditions, international brands are expanding not only in tier-I cities but also penetrating tier-II & III cities as they see India as a potential market.”
Ram Chandnani, managing director (advisory & transactions services) of CBRE India, said, “As the cities started to reopen after the pandemic, many shoppers returned to physical retail and since then have adopted ‘hybrid commerce’. Sales in July-December 2022 surpassed the pre-pandemic levels owing to increased consumer confidence, leading to a hike in spending. Leasing momentum is expected to further pick up in January-June 2023 owing to anticipated space take-up in newly completed malls.”
Bangalore and Delhi-NCR, followed by Chennai and Mumbai, led leasing activity, together accounting for almost 80 per cent of the overall space take-up during July-December 2022 period.
Rental values inched up on a half-yearly basis in certain micro-markets across most cities, driven by robust retail demand. Among high streets, rents rose by about 4-8 per cent across select locations in Delhi-NCR, Bengaluru, by 4-12 per cent in Ahmedabad, and by about 1-3 per cent in Mumbai. Meanwhile, prominent mall clusters in Delhi-NCR and Bengaluru witnessed rental growth of 3-15 per cent and 2-6 per cent, respectively.
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