Growth of retail space spreads to Hyderabad’s suburbs

HYDERABAD: As the infrastructure and growth in the Greater Hyderabad Municipal Corporation (GHMC) limits stretches to the suburbs along the Outer Ring Road (ORR), peripheral markets have been attracting retail space to cater the needs of citizens.

With regard to retail space occupancy, a significant share of around 45 per cent in quarterly leasing (Q2) was recorded in the peripheral markets of Narsingi, Nallagandla, Kokapet, Kompally and Nagaram.
According to Cushman and Wakefield, the prime high streets such as Banjara Hills, Jubilee Hills, Himayatnagar and Kondapur are still the preferred locations for retailers, but limited availability and upward pressure on rentals have led retailers to look for emerging catchments.

Further, factors favouring these fringe locations are rising population density, favourable rental arbitrage, suitable target group, landlords providing accommodative lease terms and limited competition footprint. The retail demand from consumer durables & electronics, F&B, and furniture & furnishings categories is likely to pick up in these emerging markets such as BN Reddy Nagar, Miyapur, Vanasthalipuram and Khajaguda due to the availability of quality space and proximity to residential corridors.

In the last quarter, Hyderabad recorded close to 250,000 sq.ft of leasing activity across malls and main streets, registering a growth of 8.2 per cent over the previous quarter. Robust leasing activity in main streets sustained the momentum witnessed during the last two quarters.

Faster absorption of space

Retailers across categories are scouting for spaces at prominent main street locations, leading to faster absorption of quality space. Interestingly, footfalls have surpassed pre-Covid levels across all major malls in the city, owing to higher vaccinations, employees returning to work, and an uptick in consumer demand.

Meanwhile, developers are eyeing expansion to Tier-2 markets such as Warangal, Khammam and Karimnagar gaining traction for retail demand in the post-pandemic times. Further, reputed mall developers are actively seeking out these towns for expansion. This is primarily driven by business parameters such as low-cost arbitrage, availability of land and better financial feasibility.

Rental dynamics on high streets

On the other hand, rentals across malls have remained range-bound, whereas select prominent high streets such as Banjara Hills, Himayatnagar and others have witnessed a rental hike of around 5-10 per cent  over the previous quarter.This is due to prevailing tight vacancies at these main streets causing rental dynamics to shift in favour of landlords. Further, with these high streets becoming the destination for luxury and premium brands, the impact has been noted on the rentals.

HYDERABAD: As the infrastructure and growth in the Greater Hyderabad Municipal Corporation (GHMC) limits stretches to the suburbs along the Outer Ring Road (ORR), peripheral markets have been attracting retail space to cater the needs of citizens. With regard to retail space occupancy, a significant share of around 45 per cent in quarterly leasing (Q2) was recorded in the peripheral markets of Narsingi, Nallagandla, Kokapet, Kompally and Nagaram. According to Cushman and Wakefield, the prime high streets such as Banjara Hills, Jubilee Hills, Himayatnagar and Kondapur are still the preferred locations for retailers, but limited availability and upward pressure on rentals have led retailers to look for emerging catchments. Further, factors favouring these fringe locations are rising population density, favourable rental arbitrage, suitable target group, landlords providing accommodative lease terms and limited competition footprint. The retail demand from consumer durables & electronics, F&B, and furniture & furnishings categories is likely to pick up in these emerging markets such as BN Reddy Nagar, Miyapur, Vanasthalipuram and Khajaguda due to the availability of quality space and proximity to residential corridors. In the last quarter, Hyderabad recorded close to 250,000 sq.ft of leasing activity across malls and main streets, registering a growth of 8.2 per cent over the previous quarter. Robust leasing activity in main streets sustained the momentum witnessed during the last two quarters. Faster absorption of space Retailers across categories are scouting for spaces at prominent main street locations, leading to faster absorption of quality space. Interestingly, footfalls have surpassed pre-Covid levels across all major malls in the city, owing to higher vaccinations, employees returning to work, and an uptick in consumer demand. Meanwhile, developers are eyeing expansion to Tier-2 markets such as Warangal, Khammam and Karimnagar gaining traction for retail demand in the post-pandemic times. Further, reputed mall developers are actively seeking out these towns for expansion. This is primarily driven by business parameters such as low-cost arbitrage, availability of land and better financial feasibility. Rental dynamics on high streets On the other hand, rentals across malls have remained range-bound, whereas select prominent high streets such as Banjara Hills, Himayatnagar and others have witnessed a rental hike of around 5-10 per cent  over the previous quarter.This is due to prevailing tight vacancies at these main streets causing rental dynamics to shift in favour of landlords. Further, with these high streets becoming the destination for luxury and premium brands, the impact has been noted on the rentals.