New Delhi: It has been two years since the country was hit by the mall mania. There are close to 100 operational malls in this country. Another 500 malls are already planned. But is there place for them all? The picture is hardly rosy, reports CNBC-TV18.
Every other developer in the country today, has plans to put up massive retail and entertainment centres. But the plan is most often, not for a complete shopping experience for customers.
It's about selling off shops to small investors blinded by the mall mania and booking profits.
In Mumbai alone, malls have seen 100 per cent appreciation in just six months. Prices in certain malls in the city have gone up from Rs 15,000 - 20,000 per sq foot, to up to Rs 50,000 per sq foot in two years.
Head Retail, Trammell Crow Meghraj, Bappaditya Basu says, "Roughly it takes a mall around eight years to break even if its leased out entirely. So certain developers who do not have money to hold on to the property in the initial phases, sell it to investors."
Investors in turn, are waiting for the prices to further scale up and book their own profits with no thought given to the optimal retail mix. Experts say that of malls planned in the country, only 30 per cent will actually be successful.
A survey by consultancy, Jones Lang Lasalle exclusively available with CNBCTV-18 confirms these fears. It says that though shopping centre construction is high in majority of the malls, quality is poor, vacancy risks are high and there is little or no professional branding or management.
CEO, Kshitij Retail Fund, Shishir Baijal says, "Once that happens there is a hap hazard leasing strategy, the repercussions on the malls would be disastrous."
There has been a failure of malls to match up to international quality standards and no conscious efforts at branding.
The fallout of this is high vacancy risks and the retail sector that is able to tap only two per cent of its potential. This is the darker side of India's mall mania.
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