After a bullish phase for the residential real estate segment over the last one year, retail is the next big thing for property developers in Kolkata. According to Rajneesh Mahajan, head, transaction services - retail, Cushman & Wakefield, the next two years will see an additional 5.5 million square feet (sft) of shopping space getting occupied in Kolkata.
Most of the development is planned in the emerging suburban markets, primarily due to availability of land. By the end of 2009, Kolkata will have 17 new shopping malls, with nearly six malls coming up at Rajarhat alone, according to Himon Sanyal, head, corporate services (East), Jones Lang LaSalle Meghraj.
Some of the big upcoming shopping malls in and around Kolkata include Acropolis (Ra-jdanga), Lake Mall, City Centre II, Forum II, Terminus, and DLF among others.
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.
Mahajan attributes the trend to the sudden spurt in retail activity in and around Kolkata, which in turn is due to its relatively new retail sector.
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.
With IT and ITeS sectors fuelling the growth of real estate sector in Kolkata, a substantial increase in real estate space is expected to come from upcoming commercial buildings at Rajarhat and Salt Lake area.
According to rough estimates, Sector V of the Salt Lake area alone has a skilled workforce of over 65,000. Yet, it is to be noted that the pattern of retail space development in commercial establishment will be different from the conventional ones.
According to a property consultant, vacancy in most of the retail spaces housed in some of the known commercial projects at Rajarhat is more than 50 per cent, as the developers failed to sell space.
The main reason: most of the big projects in the area are still to be completed and the yet-to-be-developed infrastructure at Rajarhat. According to Piyush Goenka of Infinity Benchmark, a 5.50 lakh sft office space at Rajarhat with the ground and first floor committed for retail use, the space is mostly booked by retailers for food courts, stationery and computer peripheral shops, pharmacy, and book stores, in accordance with the need of office-goers.
“The concept of retail space does not go well with commercial space, except for food courts and related amenities. The idea is good only when the cost of land is too high to cross-subsidise the commercial project. It does not work out well in case where the cost of land is already low,” said an executive looking after Unitech IT park project at Rajarhat.
However, another real estate major, DLF, which recently announced its second IT park in Kolkata, is betting on leasing out land to retailers at the IT parks. Its first IT park in the city has a separate retail complex, apart from three independent towers for office use.
According to A S Minocha, chairman, DLF Commercial Developers Ltd, “The large array of retail facilities provided by the DLF IT parks is positioned to make sure that the experience at work of each employee is completely changed.”
With the CBDs providing limited opportunity of growth, emerging IT hubs no doubt are going to be the next destination of big retail brands. “The retail real estate in CBD and other established residential pockets are not adequate to cater to the demand. There are very limited possibilities of large scale developments in these areas. The existing high streets do not provide much option for new-age retailing and the lack infrastructure,” said Mahajan.
Source: Business Standard
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