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MARKETBEAT

RETAIL SNAPSHOT

CHENNAI, INDIA

Q4 2013

A Cushman & Wakefield Research Publication

ECONOMY
Indias real GDP has been forecast at 5.0%
for the fourth quarter of 2013 and is
likely to increase by 0.6 percentage points in
the first quarter of 2014. HSBCs India
Composite Output Index inched up from
47.6 in last quarter to 48.5 in November, indicating a slight ease in
contraction. The Indian Rupee is currently range-bound at INR6163 against the US Dollar and has recovered from the lows of
INR67-69 last quarter. The Consumer Price Index (CPI) increased
further to 11.24% in November 2013, rising by 1.72 percentage
points from August 2013. Though the Reserve Bank of India had
revised the Repo Rate upwards by 25 basis points to 7.75% in
October to combat inflationary pressures, it left them unchanged in
December as it expects the inflation to start dipping soon. In single
brand retail, Hennes & Mauritz ABs INR700 crore foreign
investment proposal received a nod this quarter. This quarter, the
first application for FDI investment in multi-brand retail valued at
US$100 million was received from Tesco Plc. for a joint venture
with Tata Groups retail arm Trent.

RISE IN MALL SUPPLY AND VACANCY LEVELS


During the fourth quarter of 2013, a mall in Velachery became
operational, adding 311,000 square feet (sf) of supply to the city.
The mall opened with nearly 84% occupancy and the major tenants
comprise of domestic brands in department stores, electronics, and
beauty categories. The infusion of new mall supply, coupled with
the constant churn in Chennais CBD, led to a rise of 1.1
percentage points in the overall mall vacancy level over the last
quarter and was noted at 6.5%. Due to the ongoing Metro Rail
construction, mall rentals in the western submarket continued to
decline and registered a further 4.5% dip over the last quarter due
to traffic congestions. Enquiries from apparels, accessories and
cosmetic brands were high for select shopping malls in Chennais
CBD and Chennais south submarkets.

STEADY MAIN STREET RENTALS

Usman Road-North and Pondy Bazar. Mall rentals are also


expected to remain stable in the next quarter; however, vacancy
levels may reduce further due to healthy enquiries from apparels,
cosmetics and accessories retailers for the South submarket.
ECONOMIC INDICATORS
NATIONAL
GDP Growth

2012
5.0%

2013F
4.8%

2014F
5.8%

CPI Growth

9.3%

10.0%

Private Final Expenditure Growth

12.8%

10.2%

12.5%

Govt. Final Expenditure Growth

5.1%

Source: MOSPI, RBI & GOI

PRIME RETAIL RENTS DECEMBER 2013

Nungambakkam High Road

INR
SF/MTH
150

EURO
SF/YR
21

US$
SF/YR
29

Q-O-Q
CHANGE
7.1%

Y-O-Y
CHANGE
11.1%

Khadar Nawaz Khan Road

200

28

39

0.0%

5.3%

Cathedral Road RK Salai

150

21

29

0.0%

0.0%

Usman Road South

125

18

24

0.0%

0.0%

Usman Road North

140

20

27

0.0%

27.3%

Adyar Main Road

150

21

29

0.0%

-6.3%

Anna Nagar 2 Avenue

140

20

27

0.0%

-6.7%

Purusavakam High Road

110

16

21

0.0%

10.0%

Pondy Bazar

150

21

29

0.0%

0.0%

Velachery

135

19

26

0.0%

-3.6%

INR
SF/MTH
280

EURO
SF/YR
40

US$
SF/YR
54

Q-O-Q
CHANGE
0.0%

Y-O-Y
CHANGE
-6.7%

Western

210

30

41

-4.5%

-8.7%

South

225

32

44

0.0%

12.5%

MAIN STREETS

nd

MALLS
CBD

Note: Asking rents(INR/sf/month) on carpet area of ground floor Vanilla stores is quoted
Conversion Rate US$1= INR 61.87 and Euro 1 = INR 84.63

Consistent demand from retailers for main street spaces continued


to stabilize rentals across the city, except Nungambakkam High
Road, where a 7.1% increase from the last quarter was witnessed.
High demand from retailers for this prime retail location and a
dearth of supply brought about the rise in rentals during this
quarter. Enquiries from apparels, electronics and footwear brands
remained healthy in the established main streets of Pondy Bazar
and Nungambakkam High Road.

SIGNIFICANT LEASING TRANSACTIONS

PROPERTY

LOCATION

OUTLOOK

Gold Souk

Vandalur

PROPERTY

LOCATION

TENANT

PS Grand Mall

Velachery

Shoppers Stop

SQUARE FEET

PS Grand Mall

Velachery

Croma

8,000

Express Avenue

Royapettah

Mango

4,000

50,000

SIGNIFICANT PROJECTS UNDER CONSTRUCTION


SQUARE FEET

COMPLETION DATE

500,000

Q2 2014

Main street rentals are expected to remain stable; however, a


shortage of quality retail spaces may push the rentals upwards in
Cushman & Wakefield (India) Pvt Ltd
Paramount Plaza, 5th Floor
#7A/22Nungambakkam High Road
Chennai 600 034
+91 44 4299 5555
www.cushmanwakefield.co.in

For more information, contact:


Siddhart Goel
National Head- Research
Tel: +9122 6657 5555
siddhart.goel@ap.cushwake.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express
or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject
to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing
conditions imposed by our principals.
2013 Cushman & Wakefield, Inc.
All rights reserved.

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