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New Delhi, Jan. 6 Nearly 11 million sq ft of expected mall supply slated for 2008 was deferred, as developers reeled under acute cash crunch and retailers went cautious on their expansion blueprint.

According to the latest retail report by real estate consultant Cushman & Wakefield, the actual mall supply in major cities in 2008 stood at only 9.7 million sq ft, almost 54 per cent lower than the initial supply projection of 20.8 million sq ft at the beginning of last year.

Of the proposed 74 malls at the beginning of the first quarter of 2008, only about 34 were actually delivered through the year. The report takes into account major cities such as Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune. NCR cornered the largest share of the 2008 supply (4.7 m sq ft).

Given the apparent softening of demand, mall supply in major cities witnessed “significant set-backs”, said C&W. Hyderabad witnessed the least mall space at only 10 per cent of the initial projections, Pune (20 per cent), Chennai (22 per cent), Bangalore (27 per cent) and Kolkata (36 per cent). NCR and Mumbai, however, clinched a relatively higher share of the projections at 67 per cent and 47 per cent, respectively.

Overall, owing to the shortfall in supply, the vacancy rates remained at a national average of 16 per cent. This was attributed to the uneven distribution of mall space in the major cities, where mall supply has been concentrated within a single district targeting the same audience profile.

From the retailers’ point of view, the preference is still for premium high streets over malls. In cities such as Delhi and Pune, where the distribution of malls is fairly equitable, high vacancy level was a result of inadequate quality of development which deterred major retailers. In 2008, the highest level of vacancy was witnessed in Delhi (24 per cent) and Pune (15 per cent), while the lowest was in Chennai (1 per cent).

Mr Rajneesh Mahajan, Director (Retail Services), Cushman & Wakefield said, “From the projected supply of 20.8 million sq ft space in Q1 2008, we will see a spill over of about 10 m sq ft development in 2009 and 2010. Lack of funds leading to construction delays and cautious expansion by retailers have resulted in slow absorption of retail space in malls.”

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