Rentals of retail spaces in the National Capital Region and Mumbai have fallen by up to 15 per cent in the first half of this year over the previous six months on account of low demand and high base effect of last year.
According to global real estate consultant CB Richard Ellis (CBRE), rentals in the NCR have corrected by about 10 per cent in the first six months over the second half of 2008.
It said the decline was similar to an overall drop of 20-40 per cent from the levels witnessed in the beginning of 2008.
"Prime high-streets and mall spaces continue to be the focus for expansion for retailers as the rentals in these spaces have corrected due to the reduced demand and high rental values," CBRE said in the report.
The consultant further said that in Mumbai rentals are showing correction by 10-15 per cent amidst limited supply of "quality" space on some prime high-streets through the first half of 2009.
The slowdown has forced many retailers to re-negotiate rentals with developers and landlords of several malls and high-street properties, it added.
"In spite of rentals reducing to realistic levels in mall developments, retailers have tweaked the size of stores to ensure viability," it said while analysing the situation in the country's financial capital.
According to the report, locations like Khan Market and South Extension in Delhi have witnessed significant leasing activities with several food and beverage (F&B) players like Cafe Oz and Amici, and apparel brands such as Triumph and Adidas among others, entering the space.
"Organised retailers have commenced implementing their reworked or revised location strategies, which is reflected by the increased level of transaction activity as well," it added.
Similarly, the Mumbai market saw an increase in the number of enquiries by retailers for spaces in prominent malls, like High Street Phoenix, Inorbit Mall, Oberoi Mall, besides prime high-street locations such as Colaba Causeway and Linking Road.
CBRE said the first half of the year might be looked at as a period of stabilisation for the retail industry after a positive sentiment being felt in the economy with formation of the new government and the buoyant stock market.
"This has allowed retailers to reassess the positions taken up by them across the country for expansion of their stores as rental values have rationalised and flexibility is being offered with regard to lease terms," it added.
