Mall developers expect 30% increase in rental income

By

Isabelle Crossley

Published
Jul 7, 2022

As retailers continue to recover from the effects of the pandemic, mall operators across India expect around a 30% year-on-year increase in rental income, surpassing pre-pandemic levels.

Total rental income should increase to between 4% to 6% over levels in the 2020 financial year before the pandemic truly began, according to ratings agency ICRA, ET Bureau reported. A combination of pent-up demand, high vaccination coverage, and a return of in-mall interactive events has enabled malls to recover from the challenges of Covid-19. 

“The rental income improvement is faster post-second wave with recovery at 74% for Q2 FY2022 (as against 34% for Q2 FY 2021) and reaching 102% of pre-Covid levels in H2 FY2022,” said ICRA’s vice-president and senior head of corporate ratings Anupama Reddy, ET Bureau reported. “On the vacancy levels, the addition of new retail space was around 11 million square-feet in FY2021 and FY2022 across six cities.” 

However, the 2022 financial year saw an increase in vacancies within malls. Vacancy levels in malls were at 23% in the 2022 financial year compared to 18% in the pre-pandemic 2020 financial year. 

Mall operators expect vacancy rates to improve and drop in the 2023 financial year as many retail sectors have recovered to pre-pandemic sales or even higher sales. Many fashion and beauty retailers have restarted their brick-and-mortar expansion plans this fiscal, following a hiatus caused by lockdowns.