Rent in Delhi-NCR's upmarket locations rise to 5.6% in Jan-Mar: Report

Monthly rentals in Delhi-NCR's high street retail locations, including Khan Market and Connaught Place, increased by up to 5.6 per cent during January-March period as compared to the previous quarter on better demand for space from retailers, according to Cushman & Wakefield.

In its report 'Marketbeat Delhi-NCR Retail Q1, 2022', property consultant Cushman & Wakefield highlighted that footfalls in shopping malls of Delhi-NCR have reached 80-85 per cent of the pre-COVID level and rentals remained stable during the first quarter of this calendar year.

"Main streets including Khan Market, Connaught Place and DLF Galleria witnessed a 35 per cent q-o-q (quarter-on-quarter) growth in rents during the quarter on the back of strong demand and high retailer preference for these areas," the report said.

Main streets like Greater Kailash and Karol Bagh in Delhi also witnessed a slight increase in rents on a quarterly comparison.

The consultant expects further appreciation across major main street locations in the city.

As per the data, rentals in Sector 18, Noida increased 5.6 per cent to an average Rs 190 per square feet per month during January-March 2022 as against the previous quarter.

Rentals in Connaught Place rose 5 per cent to Rs 1,050 per square feet, while Khan Market saw 3.7 per cent appreciation at Rs 1,400 per square feet a month during the period under review.

Greater Kailash-1 M block and Karol bagh witnessed a slight increase of 1.3 per cent in rentals at Rs 380 per square feet and Rs 390 per square feet, respectively.

DLF Galleria in Gurugram too saw rentals increase by 3.7 per cent to Rs 700 per square feet a month. Rentals in Sector 29, Gurugram remained stable at Rs 180 per square feet.

Rentals in South Extension and Lajpat Nagar remained stable at Rs 700 per square feet and Rs 250 per square feet, respectively.

Rentals in Punjabi Bagh and Rajouri Garden too were stable at Rs 225 per square feet a month.

No increase was seen in Kamla Nagar, which commands a monthly rentals of Rs 380 per square feet.

Talking about shopping malls, Cushman & Wakefield said that "rents stabilized by the end of March quarter as business activity resumed normally, with no further extension of relaxations that were given to retailers earlier in order to weather the pandemic."

However, brief rental relaxations were given to retailers during January with operations being impacted by the third COVID wave.

"Transactions with staggered rentals with a 10-15 per cent relaxation during the first year and market average rentals in the second year are increasingly becoming a norm in the city," the report said.

Majority of the new leasing transactions are being structured with payment terms that accommodate retailers with some waivers during the first year of operation.

The consultant said that Delhi-NCR's retail leasing was led by food & beverage, fashion & apparel segments during January-March, 2022.

"Retailer churn drove majority of the leasing activity in Delhi-NCR during the first quarter.

New leases and store openings in the city's malls were recorded at 0.25 million square feet in Q1, highlighted by store relocations and churn activity," the report said.

Main streets recorded new leases and store openings of close to 0.04 million square feet with prominent markets including Khan Market, Kamla Nagar, Greater Kailash, Karol Bagh witnessing traction.

Key main streets like Khan Market and Connaught Place continued to have limited available spaces amidst huge retailer demand for these locations across multiple segments.

Food & beverage was an important demand driver for retail spaces in Q1 with new store openings by Gur Chini, Sticky Rice, Moti Mahal, Spaghetti Kitchen among others.

"International QSR (quick service restaurants) chains planning to foray in the country are eyeing Delhi-NCR as the gateway city to mark their India entry to leverage from the growing preference for global cuisines," the report said.

Retailers like Pantaloons, Tasva (by Aditya Birla), Steve Madden, Hugo Boss were active in the fashion & apparel segment during the first quarter.

"Large retailers with deep pockets have leveraged from the churn activity to expand their presence and open new outlets in the city," the consultant said.

Pet care & grooming, and electric vehicles are some other segments with active space requirements for new stores as well as expansion, especially in submarkets including South Delhi and Gurugram.

"Mall footfalls have reached 8085 per cent of the pre-COVID levels across all prominent malls in Delhi-NCR which bodes well for retailers," it said.

The consultant pointed out that no new mall supply was added to the city's mall inventory which was recorded at 26.5 million square feet. The vacancy in malls stood at 15.7 per cent at the end of Q1.

New mall space of around 0.84 million square feet across Gurugram and Noida is scheduled for completion by the end of 2022, said Cushman & Wakefield.