In spite of carrying one of the lowest rental values among metros and tier II cities for malls, Ahmedabad has witnessed a fall in demand for mall space by 50 per cent in last two years, say industry experts. According to experts, the fall in demand is a result of major rental corrections as well as lack of market research resulting in fall in occupancies.
"While corporate office has not suffered that much, commercial space in terms of malls has seen major corrections, both in demand and rentals. In the last two years, the demand for mall space has fallen by 40-50 per cent," says Vijay Shah of M/s Vijay Shah, a real estate development firm.
According to Shrenik Shah, chief executive officer of Space Management, an Ahmedabad-based real estate consulting firm, "Retail space as against office space is under pressure. That is mostly due to lack in market research wherein developers failed to survey the market properly in terms of shopping habits of consumers, their preferences, etc. and ended up in having more supply than demand."
Mall space in Ahmedabad has also been witnessing one of the highest vacancies. As per a 2009 study by real estate consulting firm, Cushman and Wakefield, the commercial capital of Gujarat recorded the highest vacancy of approximately 39.4 per cent due to existing retailers vacating space in established malls over the past two to three quarters of 2009. Average vacancy across malls in major cities of India increased from 10 per cent in Q1 2009 to 19 per cent in Q2 '09 owing to a slowdown in uptake of mall space and churn amongst the existing clients, the study further stated.
"Rentals for office space have improved by 10-12 per cent. In fact, some more action is expected from the corporate side. However, rentals in malls have seen major corrections. Also, lack of shopping experience and poor design has resulted in decline in demand and rise in vacancies," opines Jaxay Shah, director, Savvy Infrastructure Limited.
Meanwhile, according to the study, the sharpest decline in mall rental values were recorded in Ahmedabad where Sarkhej Gandhinagar Highway which corrected by 39 per cent over previous quarter, while Vastrapur saw a rental correction of 23 per cent.
Ahmedabad's Satellite Road also saw a correction of 21 per cent as a result of subdued activities from retailers in the city.
