Retail real estate struggles to survive

Pune retailers are unable to expand due to liquidity crunch and subdued demand, hampering development of malls

Retail real estate in Pune, which was hitherto a hot property, has started losing its fizz. Cash crunch, falling growth numbers and subdued demand are taking their toll on thesectors. It’s the ripple effect at its worst. Retailers are not able to expand their presence, which, in turn affects mall development.
“Owing to volatile market conditions, insecurity of jobs, there has been a decrease in the number of footfalls in the malls in Pune. The footfalls also vary from location to location and depend on the new schemes introduced from time to time to attract customers,” Kishen Milaney, property consultant, Kaypee Shelters, told FC Estate. Also, during the present uncertain times, even those who do visit the malls do not necessarily end up buying things, he added.
The city, according to him has about 60 business locations in the heart of the city, as well as in the newly developed residential zones and IT parks.
“About 20 to 30 malls of various sizes are in the making. It is not clear how many will be completed as some are looking for better brands. Some may even change hands,” Milaney said.
Big Bazaar, which has six stores of various sizes spread across Pune, says luxury items like furniture and electronic goods had taken a hit.
“Today, there are many malls being planned — however, due to the economic slowdown, we expect many of these to see only partial occupancy until things improve,” said Anand Dutta, head (retail) Pune, Jones Lang LaSalle Meghraj.
However, the real estate developers are pinning their hopes on the IT sector and believe that the fact that Pune, as a traditional automobile manufacturing hub, will continue to provide impetus to the city's retail realty sector.
Over the past 3-4 years, Pune has seen considerable growth in the IT sector, placing it close behind Bangalore and on par with Hyderabad. In the same period, the retail sector has ramped up to introduce a number of malls in response to the increased spending power and demographic changes.
There are about six under-construction malls, each measuring over 5 lakh sq ft. At present, Pune's retail-scape accounts for approximately 5 million sq ft.
There are about four-five townships of over 100 acres each planned in the city, and retail would be an inherent component of each of these. The scheduled townships will open up new frontiers, as will the proposed international airport.
Manoj Singh, store manager of Big Bazaar in Fatimanagar, is upbeat. “The footfalls have increased by 20 to 25 per cent in March 2009 compared with March last year. For example, on March 27, Maharashtra’s New Year’s day, we had a full house and did good business. On weekends and the first week of every month, we still attract good clientele,” he said.
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