India’s retailing maintains its growth trajectory in H1 of 2023

V Nagarajan

Retail leasing witnessed an uptick of 24% Y-o-Y to touch 2.9 million sq. ft, a rise of 15% compared to H2 2022, according to a survey by CBRE.

The leasing activity was led by Bengaluru, followed by Delhi-NCR and Ahmedabad, accounting for nearly 65 per cent of the total retail space absorption. Going forward, the anticipated growth in mall supply coupled with encouraging consumer spending trends, especially during the festive season, is expected to further augment sentiment for expansion among both international and domestic retailers who are well positioned in the market.

Strong demand for fashion and apparel retailers dominated the space take-up by contributing about 34% share in total absorption during H1 2023. Other prominent categories that dominated absorption included food & beverage (15 per cent), along with homeware and department store categories (14 per cent).

During H1, there was an increase in supply addition, with an uptick of 8% on a half-yearly basis and 148 per cent YoY growth. This rise in supply can be attributed to the commencement of operations of three investment grade malls located in Ahmedabad, Delhi-NCR and Chennai, collectively contributing 1.1 million sqft of new retail space during H1.

Led by strong demand for quality retail space, rental values increased on a half-yearly basis in select micro-markets across most cities. Among high streets, rents rose by about 4-13 per cent in Pune and Kolkata; by 4-12 per cent in Hyderabad and Ahmedabad and by 1-5 per cent in Delhi-NCR and Bengaluru. While prominent mall clusters in Kolkata reported a rental growth of 7-16 per cent, Delhi-NCR and Bengaluru witnessed rental growth of 4-9 per cent and 1-2 per cent respectively.

Tier II cities continued to maintain their growth trajectory and the total space take-up increased significantly to touch 0.46 million sqft in H1 compared to 0.05 million sqft and 0.19 million sqft during H1 and H2 respectively; the leasing activity was dominated by Indore. Negligible supply became operational in H1, with no change on a yearly basis but a 100 per cent decline compared to H2, 2022.

Recognising the immense potential of the consumer market, international brands continued to reinforce their presence in the country. Apple launched its first two stores in Mumbai and Delhi-NCR and UK based coffee brand, Tim Hortons which debuted in India last year, strengthened their presence in Delhi-NCR and Punjab and entered the Mumbai market this year.

European luxury brand Balenciaga is set to open its first brick-and-mortar store in Delhi-NCR through its partnership with Reliance brands. Additionally, Galeries Lafayette, a leading shopping centre based in Paris, is also planning to enter India by opening two stores in Mumbai and Delhi-NCR in collaboration with Aditya Birla Fashion and Retail Ltd.

Several notable investments were reported in the e-commerce along with consumer durables and home furnishing sectors during H1. Despite global headwinds, sustained discretionary spend and strong retail consumption amid easing inflationary pressures is likely to drive retail leasing activity.

Retail leasing in India is expected to touch 5.5-6.0 million sqft in 2023, the highest level after the 2019 peak of 6.8 million sqft. It is expected that primary leasing in newly completed malls would remain the key driver of retail space demand in 2023. CBRE expect that fashion and apparel, homeware and department store, hypermarkets, food and beverage, and consumer electronic segments will lead retail leasing activity in 2023.

I have been contemplating gifting assets to my wife in India who is also working.   Is it an ideal option?  Please clarify.  Deepak Tilsani, Sharjah

 You can gift your assets to your wife who is having income in India.  There is no tax payment involved in this transaction for your or your wife.  However, any income arising directly or indirectly from the gifted assets shall be clubbed with the income of your spouse.

Can commercial property be purchased with more than one co-owner? Is there any specific stipulation to be followed while investing in commercial property in joint names? Rajiv Kumar, Dubai.

 Yes.  Commercial property can be invested with more than one co-owner.  It is advisable to clearly specify the contribution of the co-owners on purchase of the property pro rata in the ratio of their ownership in the property. The percentage of ownership in the commercial property should be clearly specified in the conveyance deed to avoid hassles in future.   The taxation of the property will be done on co-ownership basis.