Malls not well

The mall culture that has swept over metros like Delhi NCR and, in a way, started showing signs of subsiding, is yet to take off in Tier II cities like Chandigarh. Developers and investors are waiting for commercial malls and multiplexes to generate, if not more than, at least the expected response.

Chandigarh was introduced to the concept of multiplexes with the conversion of Dhillon Theatre in Mani Majra into Fun Republic Multiplex more than five years ago. Recently, two multiplexes were opened in the heart of the city. However, they have so far failed to attract much of the brands and consequently the footfall. As many as 16 new malls and multiplexes are coming up in the tri-city in another year’s time. It will be worth taking note of how this swarm of malls will be able to survive with such a huge number competing for a slice of the same pie.

“We celebrated the fifth anniversary of the mall on November 28. In all these five years we have generated very good business as we were the pioneers of introducing the mall concept to the people of Chandigarh. After the lake and Sector 17 shopping plaza, people were exposed to the concept of shopping with entertainment,” said Chaman Sharma, assistant manager at Fun Republic.

No takers yet
Against much of the anticipation among developers at the time of the recent launch of Uppal’s Central Mall in the Industrial Area and DLF City Centre in IT Park Chandigarh, both these multiplex-cum-malls are still looking for takers. The modest footfall which these two malls are able to generate is mainly due to the multiplexes. DLF City Centre is benefiting from its location, being in the IT Park and right opposite to companies like Infosys, Tech Mahindra, Net Solutions, IBM, Daksh and Winshuttle. This makes it easily accessible for some 10,000 young IT professionals working in these companies.

The footfall and the brands occupying space in a mall, which are related to each other, cannot survive just on the multiplex. Where the developers are claiming that most of the space has been sold and leased out both in the existing as well as under construction sites, it is yet to see how this huge inventory of commercial space waiting to be launched in the tri-city would be able to generate demand. At malls where space is usually available with a mix of lease, rent and sale, the rate varies from Rs 16,000 to Rs 25,000 per square foot, depending upon the floor and the location.

Developers hopeful
“The mall, which with a total built up area of 1.10 lakh square feet is fully constructed and operational, has at present a total of 14 brands running in the mall. Around seven will be starting their operations in the next month. We are hopeful that within a few months we would be able to lease out and sell all the available built-up space in the mall,” said B S Arora, Head Sales Uppal’s Centra Mall.

“The existing debacle in the market that has resulted from the subprime crisis in the US, coupled with the economic slowdown the world over, had a cascading effect on the world markets including the real estate sector. However with the US government stepping in in a big way and rest of the world, including India, also taking measures, confidence is returning and the markets are showing signs of stabilising,” says Khair Ull Nissa, general manager (sales and marketing) Paras Build-Call Pvt Ltd.

Similar is the condition of the other mall, DLF City Centre, which has the maximum built-up area lying vacant for companies to take up.

An overdose?
At the same time there are around 17 such malls that are under construction in the areas like Chandigarh, Mohali, Panchkula and Zirakpur. Among these, a few like Shalimar Mall in Panchkula and Paras Downtown Square Mall in Zirakpur are on the verge of completion and inauguration. Where two malls are coming up in Sector 17 itself, one is coming up in the Induatrial Area in Chandigarh.

Though the developers of these upcoming malls sound to be skeptical about the future of commercial real estate in the region, they are at the same time hoping to capture the potential in the region.

Recession-hit
“The current recession in the real estate industry is definitely going to impact future mall developments in the region. The lean phase compounded by the global economic recession has proved detrimental to the real estate sector. But at the same time we are hopeful that a lot of potential exists in the tri-city that would generate demand for the malls,” said Pradeep Rai, brand manager, Paras Build-Call Pvt Ltd, over the phone from Gurgaon.

The company is constructing one of the largest malls in Punjab — Paras Downtown Square on the national highway at Zirakpur — with a build-up area of 3.5 lakh square feet.

“As we all know, quality always has its takers, and we should see robust growth coming back to the real estate business over the horizon of one to two year’s time. As far as our commercial projects are concerned, the basics are right (quality construction, location advantage, reasonable pricing, etc), therefore though the impact of the global meltdown is there, it is not very severe,” she adds. Speaking on the company’s new venture and the logic behind it, Nissa says, “We had anticipated the demand for commercial and retail space a few years back. We have designed this mall keeping in mind the future trends as well as the demands of the buyers. Our aim would not only be to tap maximum footfall but to convert this footfall into regular customers. We are hopeful that the mall concept would soon be very popular in the region.”

What remains to be seen is that at a location where malls have not generated satisfactory response, despite being right in the centre of the city, how Paras’ mall and many others on the outskirts of the city would perform in the coming months.

Further, developers are under the belief that a lot of potential exists in Chandigarh as the residents are exposed to shopping in malls in areas like Gurgaon and Delhi but not in the tri-city. They are waiting for the mall culture to take up in the region too.

Commercial demand
Surprisingly, where these malls are finding it hard to attract brands and prospective buyers, there is a huge demand for commercial space in sectors like Sector 17, which is the hub of commercial and other cultural activities. The place can be seen buzzing with crowds. Through the day, shoppers come to this area from not only Chandigarh, but from other states like Punjab, Haryana and Himachal Pradesh as well. The place is still the first choice for shoppers.

This sector has showrooms that have rentals somewhere ranging between Rs 12 and Rs 16 lakh per month. Where commercial malls are finding difficult to attract brands, one can not only find all the major international brands here, but also more than two showrooms of the same brand in the same market.

According to the local property consultants, the benchmark for rentals in Sector 17 has increased manifold over time. The trend has been that the rentals increased by almost 100 per cent in one year.

Source : http://www.expressestates.in/full_story.php?content_id=93635