From
Garden City to IT City to Mall City. It looks like malls soon will
outstrip the number of IT firms jostling for space in Bangalore. That's a
hyperbole, but as Priyanka Golikeri and Suparna Goswami Bhattacharya
find out, there's a ring of truth to it.
There are 29 malls in Bangalore at present. They make up 8.347 million
sq ft of mall space among them. Thirty-three new malls are waiting to be
opened. Once operational, these 33 new ones will add an additional
17.18 million square feet of mall space. So all in all, Bangalore will
stand to have 62 malls in another five years, with a total mall space of
25.529 million sq ft.
That’s a lot of space. A fact that begs the question: isn’t that more than enough?
Doomsday predictions, of course, are clear. This (the mall boom) will lead to a clear oversupply of 90%, according to a research done by city-based retail-real estate consultancy, Asipac.
Experts say that in any market, there has to be some correlation between the per capita mall space (PCMS) and the per capita income. So while a PCMS of 3.9 sq ft may not be considered an oversupply in a developed market like Japan; considering India’s spending power, a PCMS of even 1.2 sq ft can be considered an oversupply.
Experts in the business share the assessment. “The demand right now for malls is light. And there is definitely an oversupply,” contextualises Amit Bagaria, chairman, Asipac.
Even within the city, certain pockets like Koramangala, Whitefield, Bannerghatta Road are in oversupply. For example, in Koramangala, where the new Mantri Mall is planned, there is a clear oversupply since malls like Forum, Oasis Centre, are already in existence.
Likewise, the northern part of the city around Hebbal, which currently has one operational mall, will see an oversupply of close to 300% with the launch of five new malls in as many years.
It’s the same story in Whitefield, the Marathahalli-Sarjapur Road stretch, Bannerghatta Road and Old Madras Road, among others.
According to retail consultants in the city, the Rajajinagar-Yeshwantpur stretch appears to be perhaps the only area in balance, considering only one mall exists at present, and one more is slated to open sometime in the future. However, construction of more malls in the area will lead to an oversupply situation. That’s a given.
“The question is not really about the number of malls in the city. It is whether they are coming up in the right micro-markets. For instance, areas like Yelahanka, and those beyond Hebbal can make do with one or two malls,” contends Saurabh Katyal, senior associate director, retail services, Cushman & Wakefield.
Many a failure
The prime focus for building malls is to make money. So if the money invested is not even recovered, there is no point in coming up with new malls.
Of the existing 29 malls, as many as ten have been failures, says Bagaria. “What may save many developers from impending disaster can be the realisation that many of the new malls will be stillborn, because they will not find tenants. There aren’t enough tenants today.”
The scenario of oversupply is so bad, that even with foreign direct investment (FDI) in retail, many of the malls planned will not find favour with many international brands. In fact, of the 33 planned malls, most have not achieved even 50% pre-occupancy.
Another factor contributing to the failure of malls, say experts, could be the lack of differentiation. Almost every mall has the same brands, same 4-5 levels, with a multiplex, hypermarket, gaming station and food court, says a retail consultant.
“Hence it is difficult to differentiate one from the other. They have nothing in them to stand up to competition,” he argues.
Moreover, experts feel, it is not malls, but hypermarkets, which Bangalore really needs. “Two-three hypermarkets can co-exist within a few kilometre radius. However, the same cannot be said of malls,” says Katyal.
Experts say consumers prefer visiting malls that are within a 30-minute drive from their residences, unless a particular mall has some striking features not seen in other malls. “But since most malls in Bangalore appear carbon copies of each other, the wow factor is very low,” the retail consultant continues.
Builders should understand this and plan malls accordingly. “Just because a mall is successful in a particular area, a builder need not become excited about building more malls in the same area,” remarks Katyal.
Surprisingly, players in the mall business feel the demand is good enough for upcoming malls. Bijay Agarwal, managing director of Salarpuria Sattva, says, big malls will always do well. “The smaller ones need to worry. Big malls have everything under one umbrella; hence, witness many footfalls. Markets like Sarjapur, Koramangala, Hebbal are good.”
However, Bagaria provides a counterview. “One of the most shocking findings of our survey is that as many as 13 of the planned new malls have a gross lettable area (GLA) of 0.5 million sq ft or more. Currently, there are only about 20 malls in all of India above this size. If this is not mall mania, what is?” asks Bagaria.
Gross lettable area in a mall is the total area which can be rented out to tenants.
Picky consumers
Several consumers visit malls mainly to watch films, catch up with friends and folks in the food courts, or try their luck in the bowling alleys or gaming stations.
At most, buy groceries and perishables in bulk from the hypermarkets dotting the malls. It is hardly once in two months or once a quarter or at best during sale seasons, that the multiple jewellery, accessory, clothing and shoe brands see people snaking out of billing counters.
Ratna Shah, a mother of two from Yeshwantpur, visits Orion Mall almost every weekend. But just as an outing for her schoolgoing children. “Orion has an artificial lake where kids like to stroll around. Or we might catch up on a movie or eat at the food court.” Shah has shopped just twice this year from Orion, once during the January sale and now during the monsoon sale. “So despite almost every weekend visits, we have never really walked out carrying shopping bags,” she admits.
Likewise IT professional Karthik R Kumar frequents Mantri Square on Sundays. “But mainly to meet friends at the bar over drinks or for some movies. Besides Mantri, Malleswaram has plentiful outlets to shop from, that are closer home. So the mall is mainly for some chill-out time and not really shopping,” says the 30-year-old.
Footfalls of consequence, therefore, are not too many. And with that glut of malls set to devour the city, those (footfalls) will get still fewer at each mall.
That’s a lot of space. A fact that begs the question: isn’t that more than enough?
Doomsday predictions, of course, are clear. This (the mall boom) will lead to a clear oversupply of 90%, according to a research done by city-based retail-real estate consultancy, Asipac.
Experts say that in any market, there has to be some correlation between the per capita mall space (PCMS) and the per capita income. So while a PCMS of 3.9 sq ft may not be considered an oversupply in a developed market like Japan; considering India’s spending power, a PCMS of even 1.2 sq ft can be considered an oversupply.
Experts in the business share the assessment. “The demand right now for malls is light. And there is definitely an oversupply,” contextualises Amit Bagaria, chairman, Asipac.
Even within the city, certain pockets like Koramangala, Whitefield, Bannerghatta Road are in oversupply. For example, in Koramangala, where the new Mantri Mall is planned, there is a clear oversupply since malls like Forum, Oasis Centre, are already in existence.
Likewise, the northern part of the city around Hebbal, which currently has one operational mall, will see an oversupply of close to 300% with the launch of five new malls in as many years.
It’s the same story in Whitefield, the Marathahalli-Sarjapur Road stretch, Bannerghatta Road and Old Madras Road, among others.
According to retail consultants in the city, the Rajajinagar-Yeshwantpur stretch appears to be perhaps the only area in balance, considering only one mall exists at present, and one more is slated to open sometime in the future. However, construction of more malls in the area will lead to an oversupply situation. That’s a given.
“The question is not really about the number of malls in the city. It is whether they are coming up in the right micro-markets. For instance, areas like Yelahanka, and those beyond Hebbal can make do with one or two malls,” contends Saurabh Katyal, senior associate director, retail services, Cushman & Wakefield.
Many a failure
The prime focus for building malls is to make money. So if the money invested is not even recovered, there is no point in coming up with new malls.
Of the existing 29 malls, as many as ten have been failures, says Bagaria. “What may save many developers from impending disaster can be the realisation that many of the new malls will be stillborn, because they will not find tenants. There aren’t enough tenants today.”
The scenario of oversupply is so bad, that even with foreign direct investment (FDI) in retail, many of the malls planned will not find favour with many international brands. In fact, of the 33 planned malls, most have not achieved even 50% pre-occupancy.
Another factor contributing to the failure of malls, say experts, could be the lack of differentiation. Almost every mall has the same brands, same 4-5 levels, with a multiplex, hypermarket, gaming station and food court, says a retail consultant.
“Hence it is difficult to differentiate one from the other. They have nothing in them to stand up to competition,” he argues.
Moreover, experts feel, it is not malls, but hypermarkets, which Bangalore really needs. “Two-three hypermarkets can co-exist within a few kilometre radius. However, the same cannot be said of malls,” says Katyal.
Experts say consumers prefer visiting malls that are within a 30-minute drive from their residences, unless a particular mall has some striking features not seen in other malls. “But since most malls in Bangalore appear carbon copies of each other, the wow factor is very low,” the retail consultant continues.
Builders should understand this and plan malls accordingly. “Just because a mall is successful in a particular area, a builder need not become excited about building more malls in the same area,” remarks Katyal.
Surprisingly, players in the mall business feel the demand is good enough for upcoming malls. Bijay Agarwal, managing director of Salarpuria Sattva, says, big malls will always do well. “The smaller ones need to worry. Big malls have everything under one umbrella; hence, witness many footfalls. Markets like Sarjapur, Koramangala, Hebbal are good.”
However, Bagaria provides a counterview. “One of the most shocking findings of our survey is that as many as 13 of the planned new malls have a gross lettable area (GLA) of 0.5 million sq ft or more. Currently, there are only about 20 malls in all of India above this size. If this is not mall mania, what is?” asks Bagaria.
Gross lettable area in a mall is the total area which can be rented out to tenants.
Picky consumers
Several consumers visit malls mainly to watch films, catch up with friends and folks in the food courts, or try their luck in the bowling alleys or gaming stations.
At most, buy groceries and perishables in bulk from the hypermarkets dotting the malls. It is hardly once in two months or once a quarter or at best during sale seasons, that the multiple jewellery, accessory, clothing and shoe brands see people snaking out of billing counters.
Ratna Shah, a mother of two from Yeshwantpur, visits Orion Mall almost every weekend. But just as an outing for her schoolgoing children. “Orion has an artificial lake where kids like to stroll around. Or we might catch up on a movie or eat at the food court.” Shah has shopped just twice this year from Orion, once during the January sale and now during the monsoon sale. “So despite almost every weekend visits, we have never really walked out carrying shopping bags,” she admits.
Likewise IT professional Karthik R Kumar frequents Mantri Square on Sundays. “But mainly to meet friends at the bar over drinks or for some movies. Besides Mantri, Malleswaram has plentiful outlets to shop from, that are closer home. So the mall is mainly for some chill-out time and not really shopping,” says the 30-year-old.
Footfalls of consequence, therefore, are not too many. And with that glut of malls set to devour the city, those (footfalls) will get still fewer at each mall.
Hi,nice blog thanks for sharing ,Getting office space in Bangalore is not an easy task ,we need to check out with many things that suites to our business so we are here to help you out in all your needs .=))
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