The story of malls in Gujarat has been akin to a sinusoidal wave — some grew to scale new heights, while others failed, rather miserably.
In the region known for its centuriesold Mahajans (trade bodies) and entrepreneurs whose businesses have thrived over generations, the failure of certain malls came as a rude shock to aspiring retailers. However, all’s not over. With new investments in the offing and a constant shift in the strategy of existing mall owners to dish out the right brand mix and experience to patrons, the slow and steady revival is keeping businesses afloat.
According to mall owners, rising appetite for luxury, more awareness and increasing disposable incomes are among key reasons for retail trade to grow overall, and as a result, malls as organized retail spaces are doing good business.
This is also driving the growth of new retail spaces here. Earlier this year, Ahmedabad saw an investment of Rs 850 crore by a mall developer, Phoenix Mills Limited, to open a mall spread over 7.5 lakh square feet of space, bringing in some 35 global luxury brands.
The group is also set to invest in Surat to bring up a similar mall, for which land acquisition has already been completed, industry sources revealed.
Meanwhile, UAE-based retail conglomerate LuLu Group, which is also a significant investor in several projects here, also recently announced plans to come up with a huge shopping mall in Ahmedabad at an investment of Rs 3,000 crore.
According to real estate industry experts, Ahmedabad is particularly seeing an increase in its economic and resultant commercial real estate activities.
The city now has 2.5 million square feet of shopping centres and 0.6 million square feet of high-street store space.
“The market has increased its traction on demand and supply, and a particularly noteworthy trend is the high affinity of international retailers to establish a presence in the city. Among all the major cities in the country, Ahmedabad has the highest share of high-streetspace allocated to international retailer brands at 26%,” said Vivek Rathi, director (research), Knight Frank India.
“In the case of shopping centres, Chennai has the maximum concentration at 38%, however, Ahmedabad stands close at 27%. With the improving economic mo-mentum, national policy focus, and positive shopper enthusiasm, Ahmedabad retail market is expected to sustain the momentum in the near term,” he further went on to say.
Showrooms also see revival in demand
Covid had affected the retail market the worst but there has been a strong revival in demand in the past few months. Dipen Thakkar, a property consultant active in the commercial segment, said, “There were a number of new commercial complexes, where groundand first-floor showrooms did not have tenants after Covid. This year, we have seen improved demand for showrooms on lease from brands ahead of festival season.”
Jay Begani, the director of Jewel Plus, said, “Malls have seen good traction from fashion and electronics brands but in Ahmedabad, the jewellery business is thriving at key markets like the CG Road, Shivranjani and Manek Chowk. Not many jewellers go for malls but there is good demand from the jewellery sector in new commercial buildings.”
Challenges continue for a highly capital-intensive business
Real estate experts say that Gujarat has also not seen many malls performing well.“Several malls have failed in the past decade due to many reasons. Now, new mall development has become much more difficult because it is a highly capital-intensive business.
If the mall performs well, foreign players tend to get a stake in the mall and the developer gets money at a later stage. Therefore, not many developers are eager to go for mall projects in Ahmedabad,” said a city-based developer.
Anand Adukiya, a retail expert, said, “Gujarat is considered one of the toughest retail markets of the country because of the spending pattern of people, who prefer value for money. Not many malls have performed well in Gujarat and some new malls are facing tough competition.” Ahmedabad is becoming a metro city but spending for brands by people is less, he said.
“Not all brands perform well in Gujarat and we have observed that many are not able to get even 20% of their rent. However, the city is changing fast and the Diwali season will be better than last year in all the retail segments. Malls and high-street retail will see better business despite challenges from online retail,” he added.
After Covid, sales up 20%, footfall 30%
Better awareness about luxury brands and rising disposable incomes after Covid have led to a significant rise in consumption, which in turn has accelerated the growth of malls.
Jayen Naik, the chief operating officer, Nexus Malls, which has two properties in Ahmedabad, said, “We’ve posted a double-digit growth in the first quarter, driven by a rise in consumption.
Consumer aspiration and spending power have gone up, and shopping is often about enjoying the experience. As a result, the traction towards malls has increased. Interestingly, e-commerce has helped malls by generating and expanding brand awareness. In the end, people visit the malls to experience the product.”
He added, “In fact, several ecommerce players including Nykaa and Lenskart have turned to brick-andmortar format to be able to enhance customer experience. Lately, beauty and personal care is a growing category that drives sales besides clothing, and these are the factors we consider while deciding the brand mix.”
Speaking of improved performance, Jatin Gupta, MD, JP Iscon Group, said, “The performance of malls has improved compared to last year. Sales have increased by 20% and footfall by around 30% because, after Covid, we are again witnessing normalcy in day-to-day life.”
The overall demand is good and therefore, online retail, high-street retail, and malls are all performing well. “In the last one year, some malls in Ahmedabad have seen an increase of around 20% in rentals, and in general, one can say that super built-up rental levels have reached Rs 300-350 per sq feet in malls. Many brands are contemplating setting up bases in malls in Ahmedabad,” he added.
