Oversupply forces builders across the country to either shelve projects or convert their ambitious mall projects into mixed-use & residential projects
A huge oversupply in retail real estate sector is forcing Indian developers to turn their mall projects into homes.About 96 million sq ft of retail space is expected to be added by 2013 in the top 10 cities in India,while demand will be only for 34 million sq ft,said Crisil Research.This will create a significant demand-supply mismatch,arresting the rise in rentals.Bangalore-based,RMZ Corporation has recently converted its 1.1 million sq feet mall plan into residential cum-hotel project.The firm had earlier tried to reduce the size of the mall to 500,000 sq ft and add a new office space component.We are now building luxury homes at the location, said Raj Menda,managing director of RMZ Corp.Looking at the numbers,many real estate developers in India are seeking to convert their malls into mixed use or residential projects.This phenomenon has increased recently, said Amit Bagaria,chairman of retail consultancy Asipac.While some micro markets in Bangalore will see an over supply of 168%,Hyderabad,on the other hand,from a present shortfall of 66% is headed for an oversupply that could go as high as 322% in 2014.The Mumbai Metropolitan Region will see an oversupply of 58% with Pune at 128%.Because of the expected oversupply,a number of big mall projects,such as Atul Ruias Pheonix Market City mall,Sobha Developers Global mall,RMZ Corporations Galleria in Bangalore,Parsvanaths Metro mall in Delhi and Lancos mall projects,are either being redesigned or shelved.Delhi-based builder Parsvnath has shelved five retail projects due to fund crunch.Moreover,Pheonix Mills,Entertainment World Developers,Salarpuria,Omaxe,IVRCL and Goel Ganga Group are reconsidering their mall projects in Hyderabad,Bangalore and Pune.Sobha Developers has included a residential component in its mall project,jointly developing with Davnam Constructions.The mall was earlier expected to have an ice skating rink,amusement park and a commercial tower.With many other malls coming up in the same vicinity,Sobha is building only 660,000 sq ft of retail space while the rest will be residential, said a person with direct knowledge of the development.Sobha Developers confirmed the development but refused to comment.Delhibased Omaxe said that over supply of mall spaces will only lead to stress on rentals and lower occupancy.Building malls is not a lucrative business as the demand from retailers is lukewarm,especially in the NCR.We are not looking at setting up new retail projects now, said Rohtas Goel,MD of Omaxe.
A huge oversupply in retail real estate sector is forcing Indian developers to turn their mall projects into homes.About 96 million sq ft of retail space is expected to be added by 2013 in the top 10 cities in India,while demand will be only for 34 million sq ft,said Crisil Research.This will create a significant demand-supply mismatch,arresting the rise in rentals.Bangalore-based,RMZ Corporation has recently converted its 1.1 million sq feet mall plan into residential cum-hotel project.The firm had earlier tried to reduce the size of the mall to 500,000 sq ft and add a new office space component.We are now building luxury homes at the location, said Raj Menda,managing director of RMZ Corp.Looking at the numbers,many real estate developers in India are seeking to convert their malls into mixed use or residential projects.This phenomenon has increased recently, said Amit Bagaria,chairman of retail consultancy Asipac.While some micro markets in Bangalore will see an over supply of 168%,Hyderabad,on the other hand,from a present shortfall of 66% is headed for an oversupply that could go as high as 322% in 2014.The Mumbai Metropolitan Region will see an oversupply of 58% with Pune at 128%.Because of the expected oversupply,a number of big mall projects,such as Atul Ruias Pheonix Market City mall,Sobha Developers Global mall,RMZ Corporations Galleria in Bangalore,Parsvanaths Metro mall in Delhi and Lancos mall projects,are either being redesigned or shelved.Delhi-based builder Parsvnath has shelved five retail projects due to fund crunch.Moreover,Pheonix Mills,Entertainment World Developers,Salarpuria,Omaxe,IVRCL and Goel Ganga Group are reconsidering their mall projects in Hyderabad,Bangalore and Pune.Sobha Developers has included a residential component in its mall project,jointly developing with Davnam Constructions.The mall was earlier expected to have an ice skating rink,amusement park and a commercial tower.With many other malls coming up in the same vicinity,Sobha is building only 660,000 sq ft of retail space while the rest will be residential, said a person with direct knowledge of the development.Sobha Developers confirmed the development but refused to comment.Delhibased Omaxe said that over supply of mall spaces will only lead to stress on rentals and lower occupancy.Building malls is not a lucrative business as the demand from retailers is lukewarm,especially in the NCR.We are not looking at setting up new retail projects now, said Rohtas Goel,MD of Omaxe.
Building Developers in India has created very favourable enviornments for foreign investers as well as domestic investors.The builders as well as consumers promises to set to usher the gold rush of realty.
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