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KOLKOTA MALL SPACE TO TOUCH 5.5 M SQUARE FEET BY 2009
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It is believed that the future of retailing is going to be in malls for any product across the country. This is where the consumers get not just a wide array of choice, but also quality and the right ambience for shopping. Thus, with changing lifestyles, malls will soon become an integral part of the shopping experience. The churn in the country’s retail sector has ushered in the multi-brand, all-under-one-roof concept as well as the specialty malls as a viable option.
Currently, there are approx. 96 malls in the country, which is expected to rise to 158 by the end of current year, and more than 200 in the next 3 years.
Organised retail penetration in India is still a meagre 3.2%. However, retail industry consultant KSA Technopak estimates that organised retail could contribute 10% of the total retail turnover in India by 2010,
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implying a Compounded Annual Growth Rate (CAGR) of 44%. The organised retail sector is attracting large foreign retailers, who are entering the market in tie-up with Indian conglomerates, e.g. Wal-Mart joining hands with Bharti. Many large Indian conglomerates like Reliance, Bharti, Birla and Pantaloons have chalked huge expansion plans in the unorganised retail category. By 2008, 65 million square feet of space will be needed for retail expansion.
Reliance has plans to open 1000 hypermarkets and 1500 super markets in phased manner.
The sector is also undergoing structural change, with leading domestic retailers going through rapid growth, format migration and consolidation.
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The pace of change is likely to accelerate as foreign investment in retailing is liberalised – the government has taken the first steps in 2006 by allowing 51% FDI in "single brands" retail outlets. Increasingly, organised retailing will focus on smaller cities (of over 1 million population), which are still largely unexploited. 600 new malls are coming all over India out of which 40% is concentrated in smaller cities. Relaxation of FDI ceiling rate has made international real estate developers come to India.
has the advantage of a vast pool of educated labour and middle management class to support the rapid growth of retail industry. The industry has quickly come up as a significant employer of labour.
REAL ESTATE SECTOR IN THE EAST
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The government’s pro-active approach, state’s political stability, encouraging law and order situation, investor-friendly policies, excellent infrastructure and highly trained workforce has turned West Bengal a resurgent, vibrant and an investor friendly state. Kolkata is rising and shining brightly in the East.
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According to a first ever survey commissioned by Outlook Money on ‘The Best Cities to Live In’. Kolkata scores 3rd among the top 10 cities in India after Chandigarh & Chennai. The rating was based on three counts: Jobs & Income, Financial Infrastructure and Consumption. In the same survey, among all the six metros Kolkata ranked 2nd.
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Being in a state that is a net exporter of power, Kolkata offers the added advantage of uninterrupted power supply at highly competitive rates.
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More than eight flyovers have been added for reducing traffic congestion at key junctions, in the last 5 yrs. |
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Kolkata – the hidden Bangalore of the Eastern India – is becoming the centre for cost effective outsourcing gold rush. The city has a low cost of living index as compared to Bangalore or Mumbai. |
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Key demand drivers include influx of IT professionals, favourable housing loan scenario, rise in double income families, rise in disposable income & growing economy.
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The city has seen several swanky malls with multiplexes - Forum at Elgin Road, City Centre at Salt Lake & Metropolis at Panchasayar, Garia. |
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Apartments in the price range of R s. 15 lac to R s. 20 lac are getting absorbed with little marketing effort indicating a good demand or mid market apartments.
As per CREDAI, the real estate industry in Kolkata has added 60 mn sq ft floor spaces with more than Rs. 6,000 crore has been pumped. |
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In the next 5 yrs. CREDAI estimate development of around 250 mn. sq ft will be added in Greater Kolkata area worth Rs 37,500 crore. |
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| Parameters |
Delhi |
Mumbai |
Chennai |
Kolkata |
Bangalore |
Hyderabad |
| Availability & Cost of Skilled Personnel
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Excellent |
Excellent |
Good |
Excellent |
Good |
Good |
| Educational Facilities |
Excellent |
Good |
Fair |
Excellent |
Fair |
Fair |
| Commercial Land space |
Poor |
Poor |
Good |
Good |
Good |
Good |
| Cost of Living |
Good |
Fair |
Fair |
Good |
Fair |
Good |
| Quality Housing |
Good |
Poor |
Good |
Good |
Good |
Good |
| Recreational Facilities |
Good |
Good |
Fair |
Fair |
Fair |
Fair |
| Pollution |
Poor |
Good |
Fair |
Poor |
Fair |
Fair |
| Public Transport |
Excellent |
Excellent |
Good |
Excellent |
Poor |
Fair |
| Connectivity |
Excellent |
Excellent |
Good |
Good |
Good |
Fair |
| Other |
Good |
Good |
Fair |
Good |
Fair |
Fair |
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The mall-multiplex mania is crossing the river. Famous as the Palace City of India, Kolkata has now caught the attention of national and international real estate developers and investors.
A noticeable trend in the retail real estate segment over the last year is the fact that vacancy in the established standalone markets in the city has been much higher than that in malls. According to data released by Cushman &
Wakefield, malls like City Centre-I at Salt Lake and Metropolis at EM Bypass (Panchasayar) registered a vacancy of 2-3 per cent last year, but standalone markets in north and south Kolkata, and Salt Lake area reported 20 per cent vacancy.”
The trend is the result of current aggressive drive by the various value retailers to book as much spaces as possible. The first mall in Kolkata, Forum became operational in 2003. Unlike other parts of country, there is limited addition of shopping
centres in Kolkata. The region has picked up development activity only in recent times,” said Mahajan.
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KOLKATA OFFICE MARKET OVERVIEW
Kolkata Office Market Overview
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With around six malls operational and another 24 anticipated over the n. A strong residential catchment comprising higher and upper middle class in Rajarhat and Sector V has led to mall concentration in these areas. While Rajarhat has around 12 mall propositions, EM Bypass follows with 3 malls which are in various stages of development. Shopout Mall, Acropolis, City Centre II, Block by Block, Axis, Terminus, Forum II, Phirangi Bazaar, Money Square are a few prominent anticipated mall developments.
While quoted rentals on high streets such as Elgin Road ranged between Rs. 90 - 150 per ft2 pm (US$ 23.52 - 39.20 per ft2 pa), rentals in the CBD area Park Street/ Camac Street ranged between Rs. 100 - 170 per ft2 pm (US$ 26.13 -44.43 per ft2 pa). Mall developments in Salt Lake area has rentals quoted between Rs. 100-140 per ft2 pm (US$ 26.13 -36.59 per ft2 pa). These rentals include property taxes, but exclude maintenance charges.
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Effective Rents |
As witnessed a gradual increase in demand from the banking, insurance and other corporate office sectors. Commercial buildings with signage facility, good facade, adequate parking and access to the metro draw a premium. Older buildings in Dalhousie Square (Old CBD) that are not of prime quality, have commanded base rents of around Rs. 30-45 per ft2 pm (US$ 7.84-11.76 per ft2 pa). Maintenance charges prevalent in the CBD range within Rs. 2-4 per ft2 pm (US$ 0.52 - 1.04 per ft2 pa).The suburbs in Kolkata are being increasingly mapped by IT/ITES and BPO companies trawling tier II cities for expansions and newer setups. Buoyed by this demand, rentals for prime commercial facilities in the suburbs maintain Rs. 40-45 per ft2 pm (US$ 10.45'-11.76 per ft2 pa) levels. Rentals quoted include high-side air-conditioning and 100% power backup. Maintenance charges and property tax of around Rs. 10-12 per ft2 pm (US$ 2.61 -3.14 per ft2 pa) are charged separately.
Vacancy Rates-
With limited/ no fresh supply in the CBD (including Camac Street, AJC Bose Road, Theatre Road, Park Street etc.) and the existing stock getting rapidly absorbed, vacancy levels in the area remain low at around 5%. However, Salt Lake Sector V and Rajarhat registered higher vacancy levels of approximately 12%.
RETAIL SECTOR IN KOLKATA
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Organized retail in eastern parts of the country is projected to cross Rs.10,000 crore by 2010, according to a CII and Images study on “East India Retail : 2010 & beyond”. According to the study, Rs. 4500 crore will be invested in the regions retail sector over the next five years. This will help in setting up of over 100 shopping and leisure centres offering 20 million sq. ft. of space for 10 hypermarkets, 75 departmental stores, 150 supermarkets & over 1,000 other new outlets
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Kolkata, a key hub for commerce of Eastern and North Eastern states of India, has started catching up with the rest of the country on the retail and restaurant, mall and multiplex count. With the success of malls like Forum, Metro Polis, City Center, mall mania has suddenly griped the city. Successful running of these shopping malls indicates that Kolkatans have also changed their shopping style.
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The Real Estate growth, driven by the tech-sector, is being complemented by the increased retail activity.
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Kolkata retail real estate market can be broadly segmented into 3 zones:
- Park Street, Camac Street, Elgin Road zone.
- Gariahat, Rashbehari Avenue zone.
- EM Bypass, Ultadanga, VIP Road, Salt lake zone.
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Its proximity to Bangladesh, a country of around 13 crore consumers, and to the South-East Asian Markets, is another factor for which the city is fast emerging as a vibrant business center. |
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A recent study conducted by CII on retail trends in the city, reveals that shopping malls have spelt the death knell for the erstwhile neighborhood stores.
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The following table further envisaged the scope for organized retailing in the city: |
| City |
Area of Organised Retail per Capita ( Sq. ft.) |
Delhi |
0.54 |
| Mumbai |
0.25 |
| Kolkata |
0.07 |
| Chennai |
0.16 |
| Bangalore |
0.30 |
Hyderabad |
0.19 |
Pune |
0.45 |
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With strong Residential catchments - higher and upper middle class in Rajarhat and Salt Lake, Sector V, mall concentration is in these areas. |
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The major, branded & non-branded shopping complexes/malls which have come up in Kolkata, & are operating successfully, are: |
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A survey across various cities indicates that Kolkata scores ‘Good’ on most factors except Pollution. |
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| Mall |
Location |
Developer |
Area |
Year of operation |
Occupiers |
22nd Camac Street |
Camac Street |
Khaitans |
150,000 |
Operational |
Pantaloon, West Side, Pizza Hut, Planet M |
Forum |
Elgin Road , Kolkata |
Sunsam Properties |
200,000 |
2003 |
Shoppers Stop, BE, Nike, Catwalk, Swarovski, Weekender, M&S. Multiplex (Inox) ... |
City Center |
Salt Lake, Kolkata |
Bengal Ambuja |
200,000 |
2004 |
Shoppers Stop, Inox-Multiplex |
Swabhumi |
Salt Lake, Kolkata |
Bengal Ambuja |
80,000 |
2001 |
Local brands |
Highland park |
EM Byepass Kolkata |
KMGL |
120000 |
2004 |
Big Bazaar |
South City Mall |
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A consortium of developers |
300,000 |
2004 |
Many of them |
A number of prominent projects in the retail sector are coming up in Kolkata. Some of these are:
MALLS / RETAIL OUTLETS |
LOCATION |
AREA (SQ. FT.) |
DIAMOND HERITAGE |
Strand Road |
519,000 |
DIAMOND PLAZA |
Jessore Road |
348,000 |
DIAMOND VIP MALL |
V.I.P. Road |
550,000 |
MANI SQUARE |
E. M. Bypass |
500,000 |
CITY CENTRE II |
Rajarhat |
500,000 |
SOUTH CITY JUNCTION |
Prince Anwar Shah Rd |
700,000 |
DLF |
Rajarhat |
400,000 |
OTHERS
RAINBOW
N S ROAD |
Centrally ac, kidzone, elaborate fire fighting measure, Floor-2,
Area-1,50,000sq.ft
Car park-more than 150
Height of floor-4.2-4.4m |
GALAXY |
Grand Atrium, automated control room,loading & unloading bay,fire fighting arrangement,floor-2,basement + ground + 5
Area-2,68,000 |
QUEENS MALL
Queens ROad |
Area -104400, Floor -2 basement+ground floor
5 Building |
AVANI RIVERSIDE MALL, HOWRAH |
Pantaloon & Big Bazaar will be shopping anchors,120,000sq. ft |
OTHERS –ACROPOLIS, FORUM –II, TERMINUS, LAKE MALL,HAUTE STREET etc |
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Apart from above few other mega projects for Malls are also in pipeline, viz. ‘Acropolis’ by the Merlin group over a land area of 2.80 lac sq. ft.; Peerless’s ‘Axis Mall’ with a construction area of 5 lac sq. ft.; Reliance Industries Ltd.’s proposal for project of Hypermarkets & Supermarkets over 1,000 acre of prime land & Salim Group of Indonesia’s proposal to set up a food park with an investment of around R s. 1,000 crore. |
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With the launch of first shopping mall of the city Forum in early 2003, the mall fever has suddenly gripped the city and has reached fever pitch. Many of the major developers in the city have announced such projects or are planning to enter the retail bandwagon. Forum has become one of the favorite shopping destinations in the city. It has average weekday footfall of between 5,000 - 7,000 person that further increases to 10,000 -15,000 persons on weekends. About five malls and FEC's are proposed in different parts of the city with major concentration along E M Bypass. |
In short to medium term few more projects are likely to be announced in the city. The mall space in the city is likely to be augmented at the annual rate of about 0.4 to 0.5 million sq.ft. per year for next few years before getting stabilized. It is anticipated that in the next 3 years there would be about 2.0 million sq.ft. of mall space in the city.
A few of the prominent high street retail destinations include Park Street, Esplanade area, Camac Street, Shakespeare Sarani and Garia Haat.
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| High Street Markets of the City |
Micro Market |
Profie |
Key Tenants / Occupiers |
Rentals (Rs/sq.ft/month) |
Camac Street |
Located in Central Kolkata, this market has gained prominence in recent years as compared to the other well-developed markets in the city. It also has popular retail destinations like the Vardhan Market and 22 Camac Street. |
Pantaloon, West Side, Gautier, Pizza Hut and Planet M. |
100-120 |
Park Street |
Also located in central Kolkata, this is one of the oldest retail markets of the city. Many of the occupiers here have been here for more than one generation. It houses some of the oldest bars and restaurants in the city. |
Music World, Barista, Oxford Book Store and Park Hotel, Levi's, Oyzterbay |
100-120 |
Shakespeare Sarani / Theatre Road |
Located in central Kolkata this road was earlier known as Theatre road. With the opening of branded retail showrooms in recent years, this road has gained importance. Most of the well-known brands in Kolkata have a presence here. It also has the AC market, one of the oldest in the city. |
Lacoste, Adidas, Nike, Reebok, Benetton, Zodiac, Allen Solly, Underlines and a few designer boutiques |
90-100 |
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Kolkata will be one of the few metros with a balance between demand and supply. Only a few malls are located in Kolkata and most have a non-conflicting catchment. Kolkata is one of the few cities where what is planned by the mall developers is implemented
| Retail Mosaic of the City |
Traditional Markets |
Bowbazar market, Bagri market, Barrabazar market, Chandni market, China bazar and Lake market. |
High Street Markets |
Park Street, Esplanade area, Camac Street, Shakespeare Sarani and Garia Haat. |
Shopping Complex / Malls |
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| Small format - non branded |
A/C Market, Vardhan Market, New Market and Shreeram Arcade |
| Small to medium format - non branded |
Emami No. 1 , Metro Plaza and Charnok City |
Medium to large format - branded |
The Forum and 22 Camac Street are the only operational shopping malls in this category while there are 5 more projects in pipeline |
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Retail Space to increase five times
Currently there are seven operational malls - Forum Mall, Home Land, Avani Heights, Gariahat Mall, Orchid Mall, City Centre, Metropolis Mall, and Orchid Mall - with 1.4 million sq ft of built-up space in total. Vacancy levels are low around 1%.
According to Abhishek Kiran Gupta of JLLM, the retail real estate market in Kolkata is expected to grow exponentially with as many as 16 new malls with 6 million sq ft to be operational by 2008-09. 3.1 million sq ft is likely to come up by end 2007, including Forum II, South City Mall and Mani Square
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Rental values in malls grew 57% in central and 35% in suburbs y-o-y. Ongoing rentals were Rs 275 per sq ft per month in central, and Rs 95 per sq ft per month in suburbs.
JLLM believes that Kolkata is on the threshold of modernisation and is rapidly adapting to establish itself as a world-class city. This will continue to drive demand for space in the city and also rentals upwards.
Author - Ruchika Sharma - India Institute of Real Estate - Kolkata
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