Bandra seeing sharp drop in retail rentals: Cushman

Jaideep Wahi, Cushman & Wakefield sees the medium and long-term markets like Bangalore, Chennai and over time Hyderabad to be attractive for retailers. He says, the south markets have been attractive whether it be Bangalore or Chennai. The rentals have been on the lower side and it has been profitable for most retailers.

Also Read: Rs 6000/sqft realisations sustainable in FY14: Prestige Est

According to Wahi, Bandra area witnessed sharp drop of 12 percent in retail rentals due to increased availability caused by exit of few retailers. Other locations remain largely stable on account of lack of activity and limited transactions.

Below is the verbatim transcript of Jaideep Wahi's interview on CNBC-TV18

Q: What have the pressures been like in Bandra in terms of retail rentals? What are your observations about other areas in Mumbai?

A: Traditionally, Linking Road has been a central market and main street for Mumbai. Of late with new malls coming in the vicinity and from a supply side and from a demand side, retailers are looking at store level profitability, it has forced retailers to either downsize their stores or in some cases exit Linking Road. It is a combination of both the things and will be stable going forward, but there will be increasing pressure as we see more and more retail developments coming in the vicinity.

Q: What are you spotting in terms of a trend now? Where exactly is the interest shifting for retail space acquisitions within the Mumbai market and where do you see further appreciation of prices from current levels?

A: Mumbai markets in terms of the Andheri Link Road, both main streets and shopping centers are in that area, towards New Mumbai is a retail hot spot. I see an appreciation in that side. Colaba has been a traditional main street with its sets of retailers and therefore, I see that market to be stable. It is about Linking Road, where now retailers have option to go to other markets to cater to their consumers. For first time, we are seeing availability of space in Linking Road which was not there earlier. So, there is definitely a downward pressure on prices on Linking Road.

Q: Prestige Estates has been growing well in Bangalore, Chennai is becoming a very lucrative market, specifically in commercial. What are you noticing in the south-based markets now? Do you continue to see the same amount of traction in markets like Bangalore? What would your observations be in markets like Chennai?

A: From a retail real estate standpoint, the south markets have been attractive whether it be Bangalore or Chennai. The rentals have been on the lower side and it has been profitable for most retailers. Chennai as a market has had issues in terms of having quality real estate developments coming up. So there has always been a shortage of supply and more demand. Therefore, I see the medium and long-term markets like Bangalore, Chennai and over time Hyderabad to be attractive for retailers.

Q: We have spoken about the retail markets, but the weakness that you are seeing in retail markets in Bandra, in key areas, can you extrapolate it at all in terms of the residential prices? Do you think that is in its own trajectory and we have not seen any softening there, if in case that is an area you have also looked at?

A: I would cater this to markets spreading over the city. Linking Road has been a traditional high street for Mumbai for long time. Most retailers would want their flagship stores to be on the Linking Road. Not anymore. I would say that quite a few international retailers who are coming in are looking at having their flagship stores in shopping centers. So it is a question of the demand for space at that price coming down on Linking Road and as store level profitability becomes important for retailers, they are definitely having a relook at this.