New retail space addition remained negligible during the first six months of this year, according to a study by property advisory firm CBRE.
"Most prominent shopping centre projects that were expected to reach completion during the period were deferred to the second half of the year, largely due to construction delays," the report said.
At present global as well as domestic Food and Beverage (F&B) retailers, followed by value retailing, remained the key demand drivers for store space in the country.
"As a consequence of the deferred supply of fresh mall space during the first two quarters of 2015, there has been a rising demand for retail space across high streets of leading cities such as Mumbai, NCR and Bangalore," the report said.
The lack of quality space has also given more bargaining flexibility to popular shopping centres, leading to the emergence of the performance guarantee model-wherein brands are required to guarantee a certain amount of business to the mall developer, it said.
Anshuman Magazine, chairman and managing director of CBRE, South Asia said that since the addition of fresh shopping centre space is expected to remain sporadic and unlikely to accommodate the real estate plans of most brands, high streets will attract the spillover demand from retailers in forthcoming months. "Online shopping trends, meanwhile, are fast catching up with traditional shopping methods on the back of an increasing number of e-Commerce platforms."
The second half of 2015 is likely to witness fresh supply addition to the tune of 6 million sq ft in cities such as the Delhi National Capital Region (NCR), Bangalore, Pune, Hyderabad, Mumbai and Kolkata. More than 60% of this fresh mall space anticipated in H2 2015 is expected to come up in the NCR, which is likely to witness the completion of key shopping centre developments in the next six months.
Rental values displayed mixed sentiments across leading cities during the first half of the year. "High street markets such as Connaught Place (Delhi), Linking Road (Mumbai), Kammanahalli (Bangalore), and Koregaon Park (Pune)-saw a rental rise, while most others saw stable values with no high street witnessing a decline," the report said.
Mall clusters in prime retail markets such as South Delhi, Central Mumbai and East Bangalore witnessed an increase in rents as most global brands preferred these prime shopping locations. "Malls in the suburban districts of Noida and Gurgaon (NCR), Bangalore and Kolkata, meanwhile, maintained stable rental values during H1 2015."