DLF, a significant player in the Indian real estate market, projects a strong 19–20% increase in retail rental income from its malls in FY24. This prediction is supported by rising mall consumer spending and higher lease rental fees. With growth ambitions, DLF's retail portfolio could expand to 9.5 million square feet (msf) from its existing size of 4.5 msf. In order to take advantage of shifting retail dynamics, the company's strategy focus includes luring premium businesses and gourmet groceries to its malls. The revival of malls, which provide a variety of experiences beyond shopping, is consistent with larger trends in India's retail industry.
DLF, a prominent real estate firm, foresees a noteworthy upswing in its retail rental revenue from mall assets, expecting a substantial 19-20% year-on-year surge in FY24. This promising outlook is underpinned by factors like an uptick in consumer spending within malls and the application of increased lease rental charges.
During a discussion at the 19th edition of MAPIC India, a retail industry summit, Pushpa Bector, Senior Executive Director and Business Head of DIF Retail, highlighted a substantial 30% increment in lease rents compared to pre-Covid levels. DLF's current retail portfolio encompasses approximately 4.5 million square feet (msf) of retail space. The company's expansion efforts include ongoing mall construction projects poised to augment its portfolio to 6 msf, with additional projects in the planning stage that could expand its holdings to 9.5 msf.
These projects encompass the development of a mall in Goa, a mall anchoring a residential project in Delhi, an expansion of DIF Promenade in Vasant Kunj, and the ambitious Mall of India in Gurugram, which is yet to be inaugurated. DLF's retail assets are housed under its rental subsidiary, DLF Cyber City Developers, with DLF holding a controlling 66.67% stake, and the remaining interest owned by the Government of Singapore Investment Corporation (GIC).
Bector emphasized the strategic timeline for leasing activities related to their under-construction malls. These properties, scheduled for unveiling in 2025, will commence leasing in October this year, with completion anticipated by the end of 2024. This expedited timeline aligns with the company's goals for these promising ventures.
Furthermore, Bector underscored DLF's focus on attracting high-end luxury brands to their malls. She explained that their anchor tenants predominantly comprise gourmet supermarkets, a departure from the conventional hypermarket chains that often populate malls. Bector expressed reservations about hypermarkets, citing their significant real estate footprint.
In a post-pandemic scenario, with consumer spending on the rebound, malls are witnessing a resurgence. This renewed vitality underscores the enduring appeal and adaptability of malls in the retail landscape. According to JLL India, the country's mall stock is poised to grow substantially, with expectations of a 43% increase, reaching 127 msf by the end of 2027, up from the current 89 msf.
DLF's optimism about its retail rental revenue aligns with broader trends in the Indian retail sector. As economic activities rebound and consumer confidence improves, malls are once again becoming hubs for shopping, dining, entertainment, and social engagement. This resurgence is particularly evident in premium and luxury segments, where high-end brands and gourmet supermarkets are attracting discerning shoppers.
In terms of expansion, DLF is strategically positioned to capitalize on the evolving retail landscape. The inclusion of high-end luxury brands and the emphasis on holistic experiences within their malls contribute to their competitive edge. As new projects come to fruition, DLF is poised to play a pivotal role in the growth and transformation of India's retail sector.
This news from DLF reflects a broader trend in the Indian retail market, where malls are evolving to meet the changing preferences of consumers. In addition to shopping, modern malls offer a wide range of experiences, including dining, entertainment, and even cultural events. This multifaceted approach is helping malls remain relevant and attractive to consumers in an era of online shopping and changing retail dynamics.
As more consumers return to physical retail spaces, the demand for quality mall experiences is expected to continue growing. This presents opportunities for developers like DLF to invest in and expand their mall portfolios.
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