Factors such as cheap rentals, easy occupancy and the ever increasing money-making population have ensured a significant shift of malls and retails chains to Pune, which the industry experts believe, is growing at the same rate as Hyderabad and Chennai in terms of the retail scenario.
Retail giants such as Dolphin, 44 Snew Hills, Westend Mall, Inorbit, Xion, Pride Park Street, are all coming up in this information technology and automobile hub of India over the next two years or so.
Even when almost all the retail chains are experiencing a slump in sales, companies are happy with the higher profit margins that a city like Pune offers as against metros like Mumbai, Delhi and Bangalore.
According to a detailed study conducted by Jones Lang LaSalle Meghraj, Pune’s retail scape accounts for approximately 5 million square foot (sq ft) in terms of both organised and unorganised retail. As the city expands towards the eastern and western belts, atleast 10 malls with an area of more than 5,00,000 sq ft are under construction or in the development stage. Localities like Kharadi, Hinjewadi, Pimpri-Chinchwad, Kothrud and Bhugaon have emerged as the main focal areas of retail development. The development is happening so fast that the retail sector is getting ready to host as many as 17 malls in the next two years.
Speaking to Business Standard, Anand Dutta, retail head, Jones Lang LaSalle Meghraj said, “Brands like Mango, Staples, Croma have been operational in Pune for quite some time. Retailers are ready to enter Pune because of easy occupancy. The huge presence of the information technology sector and the fact that Pune is a traditional automobile manufacturing hub will continue to provide impetus to the city’s retail sector. New town planning regulations in Pune will also result in the highest per-square-foot parking in shopping centres anywhere in the country. All this will help Pune attract top retailers.”
He further added, “Retailers have identified four to five residential townships of over 100 acres each planned in the city, where retail would be an inherent component.
The scheduled townships will open up new frontiers, as will the proposed international airport.”
However, there are a few issues like the lack of funding and slow economic growth impacting the retail sector in Pune. Retailers are not able to expand their presence, which in turn affects mall development. “The mall rental debacle also needs to be sorted out. A wider acceptance of the revenue-sharing and minimum guarantee models would be a significant step forward all around, could be a solution,” he stated.
When compared with cities like Chennai and Hyderabad, Pune provides better opportunities for retailers to pitch in. “The retail situation in Chennai and Hyderabad is muted and the transactions are going on at a more subdued level. All leasing transactions now feature the revenue-sharing options rather than full rental method, since this is now the only way of getting retailers interested in occupancy,” the survey identified.
In Hyderabad, the GVK mall with an area of 6 lakh sq ft is ready while the Inorbit Cyberabad, with an area of 11 lakh sq ft will be ready by January 2010. The other upcoming malls like Inorbit and RK Cineplex are comparatively small.
In the case of Chennai, Ampa Mall with 4.5 lakh sq ft of area is ready while Express Avenue with an area of 8 lakh sq ft will be operational by early 2010.
“The numbers clearly show that the retailers and developers are preferring the city of Pune, which is less saturated as against Hyderabad and Chennai and provides better business options,” he added.
