- Despite global headwinds, many international brands are expanding in India, says a CBRE report.
- Most of the leasing activity in H2 2022 was driven by fashion and apparel retailers.
- Over 90% of respondents said in CBRE’s Live-Work-Shop survey that they shopped via multiple channels.
In the second half of 2022, American home furnishing chain
Adidas opened an experience store in Delhi-NCR, as did Zara, Nike, and Azorte. But they are not concentrated only in big cities, Tier-2 cities are equally popular with international retailers. While Uniqlo opened its first store in Chandigarh, Tim Hortons entered Ludhiana, and
“The Indian retail sector is recovering, and we anticipate that it will continue to gain momentum through 2023. Even amid difficult global economic conditions, international brands are expanding not only in Tier-I cities but also penetrating Tier-II & III cities as they see India as a potential market," said Anshuman Magazine, chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.
Retail leasing picks up in second half
In the second half of 2022, retail leasing activity was down 19% year-on-year. But as compared to the first half, leasing went up 5% in the second half, the consulting firm says. Also, in 2022, retail sales went up by 20% as compared to the year before driving more retailers towards expansion.
“Sales in July-December ‘22 surpassed the pre-pandemic levels owing to increased consumer confidence, leading to a hike in spending. Leasing momentum is expected to further pick up in Jan-Jun ‘23 owing to anticipated space take-up in newly completed malls,” said Ram Chandnani, managing director - advisory & transactions services, CBRE India.
While the expansionary sentiment was higher in the second half of the year, most of the leasing activity was driven by fashion and apparel retailers. This category accounted for 42% of the overall leasing activity seen in the second half of last year. The next biggest segment was food and beverage – which accounted for 12%, followed by hypermarkets at 7%.
The entertainment category, which was impacted the most during the pandemic, also emerged among the top demand drivers in H2 2022, with a nearly 6% share in the overall space take up.
Since the Covid-19 pandemic, shoppers have been increasingly opting for hybrid commerce – which is essentially a mix of offline and online retail. Over 90% of respondents said in CBRE’s Live-Work-Shop survey that they shopped via multiple channels. “Despite the continued growth of online retail, physical retail continues to gain prominence among Indian shoppers,” CBRE said.
In spite of the gaining prominence, footfalls in retail and recreational spaces are yet to hit their pre-pandemic levels in major cities in H2 2022. However, they have been showing improvement on a quarter on quarter basis. Compared to June, footfalls in Mumbai, Delhi and Pune increased by 30%, 19% and 13% respectively in October.
Thanks to the rising demand from retailers, rentals have also gone up on a half yearly basis, albeit in selective markets. While prominent mall clusters in Delhi-NCR and Bangalore witnessed rental growth of 3-15% and 2-6%
Rental values inched up on a half-yearly basis in certain micro-markets across most cities, driven by robust retail demand. Among high streets, rents rose by about 4-8% across select locations in Delhi-NCR, Bangalore, by 4-12% in Ahmedabad, and by about 1-3% in Mumbai. Meanwhile, prominent mall clusters in Delhi-NCR and Bangalore witnessed rental growth of 3-15% and 2-6% respectively.
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