The COVID-19 pandemic has hit every country in the world but India’s story stands a lot different. The government is facing twin challenges of containing the virus and reviving the stagnant economy. The second lockdown has hit all businesses hard, and malls are not an exception.
The mall operators are looking at a consolidation scenario in a post-Covid world. And, stronger players are expected to run away with the market share at the expense of the smaller ones.
Smooth run for larger operators
According to Knight Frank, the Indian mall industry remains an attractive asset class.The industry has received investments worth US$ 3.3bn since CY11 across 26 deals. The industry has even managed to extend beyond the major cities.
However, the majority of older malls in India are small in size. It is difficult for them to survive against the new properties which are more agile and quick.
The industry had witnessed swift recovery post the first lockdown. Bigger malls emerged as a preferred choice of people due to their ambience and higher safety standards.
However, the industry does come with its own set of problems. They could act as a deterrent for smaller players going ahead due to their finance-related constraints.
As per a JM Financial report, mall projects continue to have a long gestation period. It requires a large capital backup. Despite these challenges, the mall network has continued to grow with larger players penetrating newer localities.
Are malls still as attractive?
With the second Covid wave receding, people would be looking for recreational activities. And, malls are the most viable options for them. A similar trend was observed last year where people came out in large numbers following ease in lockdown.
There was also a shift of preference towards larger malls which operated at 70% of pre-COVID levels before the restrictions were imposed again.
Malls continue to be an attractive investment opportunity as most of the big players are still standing tall. Many of them are targeting expansion. Blackstone has recently purchased 9 malls from Prestige Estates while Phoenix Mills is on the lookout to expand its mall portfolio.