Hyderabad records highest share of Grade A mall stock in India

Mumbai: Knight Frank India, the leading international property consultant in the country, in its latest report ‘Think India, Think Retail 2022 – Reinventing Indian Shopping Malls’ cited that Hyderabad recorded 7.2 mn sqft of gross leasable area (GLA) as of H1 2022 comprising a share of 7.7% of the country’s (top eight Indian cities) total mall stock with 52% of the city’s mall classified as Grade A.

Hyderabad has the highest share of Grade A mall stock in the country. Gross leasable area across 217 operational malls in top 8 cities in India stood at 92.9 mn sq ft as of H1 2022. A significant growth from 77.4 mn sq ft of gross leasable area registered until December 2019 across 255 malls in India.

Grade-wise mall stock distribution in Hyderabad: Grade A malls comprised a maximum share of 52% of the total stock in the city with 3.9 mn sq ft as of H1 2022. This is the highest percentage share of Grade A leasable area for a city across the top eight markets of India. The share of Grade B and C malls stood at 21% (1.57 mn sq ft) and 27% (2.02 mn sq ft) respectively.

Grade A malls contributed 39% of the total stock with 36 mn sq ft in H1 2022. High occupancy, strong tenant mix, good positioning and active mall management being the key driving factors. Grade B mall stock, with decent occupancy and tenant mix, contributed 31% with 29.1 mn sq ft. Grade C malls contributed the lowest 30% (nearly 27.8 mn sq ft) during the same period. High vacancy rates, poor tenant mix, and relatively poor mall management impacted the contribution by Grade C malls. Of the total number of 271 operational malls in India, Grade A comprised of 52 malls accounting to 19%. Grade B and C comprised of 35% (94 malls) and 46% (125 malls) respectively.

Shishir Baijal, Chairman & Managing Director at Knight Frank India said, “The retail real estate sector has reached a new level of maturity where smaller sized and lower grade developments are giving way to Grade A malls. The existing Grade A malls have over 95% occupancy which is indicative of the demand for quality real estate in this segment. Given that retail malls are experiential, more of the future developments will want to create destinations. Therefore, scale and quality of development would require developers to specialise in shopping centre development and operations. Like the office segment, post consolidation, retail real estate too will offer great opportunity for investments including REITs in the future.”