Mumbai: There has been a sharp rise in low performing retail assets with approximately 13.3 million square feet of retail shopping centre space categorised as ‘Ghost Shopping Centre’ while high streets outperformed shopping centres last year. This was mentioned in the Knight Frank India’s latest report, ‘Think India Think Retail 2024 – Shopping Centre and High Street Dynamics Across 29 Cities’.
According to the report, an increase of 238% year-on-year (YoY) was witnessed in Ghost Shopping Centre by Gross Leasable Area (GLA) since 2022 in the prime markets, while the number of shopping centres moved to 64 by the end of 2023 over 57 in 2022. As a result, the report estimates a loss of value to be at Rs 670 Crore in 2023.
Rise of Ghost Shopping Centre stock
Shopping centres in distress grapple with ongoing hurdles, compounded by fresh additions worsening their already elevated vacancy rates. This surge has led to a rise in the count of shopping centres labelled as Ghost Shopping Centre stock. Such a scenario offers institutional investors the chance to explore avenues for repurposing or revitalizing their retail portfolios, while developers can seize opportunities to monetize these assets through repurposing or redevelopment efforts.
Chairman & Managing Director, Knight Frank India, Shishir Baijal said, “The momentum of consumption, propelled by rising disposable incomes, a youthful demographic, and urbanization, tilts in favour of the organized retail sector. An enhanced retail experience remains crucial for shoppers, highlighting the significance of physical retail spaces. Grade A malls have notably excelled, maintaining robust occupancy, foot traffic, and conversion rates, thereby delivering value to their customers. Conversely, Grade C assets and those classified as Ghost Shopping Centres are lagging, prompting landlords to take action to rejuvenate or divest such properties.”
Bengaluru follows Mumbai
While Mumbai accounted for 2.1 mn sq ft (rise of 86% YoY) Ghost Shopping Centre stock, it is followed by Bengaluru with 2 mn sq ft (rise of 58% YoY). The National Capital Region (NCR) accounted for the highest stock measuring at 5.3 mn sq ft (rise of 58% YoY). Hyderabad is the only city to record a decline in the Ghost Shopping Centre stock by 19% YoY to 0.9 mn sq ft in 2023.
The report also noted that high streets generated an average revenue of Rs 30,893 per square feet in 2023. It projected that the potential consumption across 58 high streets in 29 cities will be over Rs 2500 Crore. The potential consumption in high streets on a per sq m basis surpasses that of the operational shopping centres by 238% across 29 cities, mainly due to higher trading densities across some categories that fare well only on high streets.
“High streets constitute a vital aspect of urban life, often preferred by traditional shoppers. This is further established by the notably higher average revenues per square foot earned by retailers in high streets compared to shopping centres. Despite grappling with inadequate infrastructure, many retail high street locales are now witnessing concerted endeavours towards urban renewal particularly in tier 1 cities. It is our anticipation that, in the foreseeable future, the establishment of new mobility infrastructure will further catalyse the resurgence of prime high streets, reclaiming their status as premier destinations,” Baijal said.
The trends, according to the report, show that apparel dominated the retail market across high streets with 29% contribution followed by Food & Beverages at 18% exhibiting the importance of dining options for consumers as an integral part of their shopping trips. Accessories cover 17% in high streets demonstrating relevance of impulse shopping.
The report delves into the retail real estate markets beyond the top-tier markets. This comprehensive study covers 340 shopping centres and 58 high streets across 29 Indian cities, conducted through primary surveys. This survey meticulously examines retail locations in the selected markets to compile a comprehensive compendium of store-level information. In the report, Knight Frank has projected potential revenue of the shopping centres across 29 cities to reach USD 14 billion during FY 2024-25. The revenue projections for shopping centres is based on an extensive primary survey of 340 shopping centres, including the top 8 cities.
