Retail rentals are recovering after more than a year of decline with sales in general having almost gotten back to pre-pandemic levels. Retailers and real estate agents say rentals have started to climb and are inching toward 2019 levels for the first time in the past 18 months.
Retail sales rebounded to 96% of what they used to be before Covid in September, according to a survey by the Retailers Association of India. In recent weeks, they have even surpassed the pre-pandemic trajectory amid heightened purchases of food to fashion products to jewellery ahead of Diwali . That’s encouraging many retailers to think about expanding again.
“The overall theme is that the rental market is firming up,” said Pankaj Renjhen, joint managing director for retail at property consultant Anarock.
Retail rentals had dropped 20-25% on an overall basis in key malls and high streets as the pandemic wreaked havoc on stores and malls over several months.
‘Bullish Outlook for 2022’
For example, rentals in Connaught Place in Delhi dropped 15-20% over the past year or so but are on the path to recovery, real estate agents said.
To be sure, Reliance Retail, Aditya Birla, Tata and other deep-pocketed retail groups hadn’t ceased expanding even during the pandemic. Others are now joining in to take advantage of growth and still-favourable rentals.
Landmark Group, Nike, Puma, Levi’s, Skechers, Biba and Blue Stone are among those snapping up space in malls and high streets amid the revival of business.
“Earlier, people were cautious but almost everyone is expanding and have a bullish outlook for 2022,” said Vivek Shrivastava, head of business development at Benetton India, who said the Italian fashion house has “moderate” expansion plans on cards, without divulging details.
Renjhen of Anarock said while sports and athleisure, fashion and lifestyle, and footwear among some segments have fared well over the months, there is still pain in the overall market. Businesses such as restaurants, travel and gift retailing shrank during the pandemic. Therefore, he said, an overall rental recovery is only expected by March.