HYDERABAD: The retail sector in Hyderabad is showing signs of recovery after a prolonged decline in sales due to the pandemic, according to statistics. Rental activity in the city is also on the rise.
Hyderabad recorded a blistering 72% quarter-on-quarter growth in retail rentals. More than 2,40,000 square feet were leased in the last quarter of fiscal 2021. The city saw more than 50 transactions in the last quarter, surpassing the pre-pandemic quarterly average of 31 transactions.
According to a report by Cushman and Wakefield, a real estate advisory firm, the city saw gross rental activity double in 2021 with nearly 200 transactions for 1.4 million square feet. Shopping centers also saw a significant increase in shopping activity in the fourth quarter, which accounted for 30% of all transactions, after activity had been subdued in the previous quarter.
Pent-up customer demands during the second wave of Covid, along with higher discretionary spending during the holiday season, have improved retailer business. High-end malls have seen an increase in footfall and store-level sales are also reaching pre-pandemic levels.
The report further indicates that the fashion and apparel sector accounted for the highest proportion (62%) of rentals in the fourth quarter, compared to 36% in the third quarter. Multi-brand retail stores and affordable lifestyle brands such as WestSide, Zudio, Max, Levi’s and Mugdha have leased space in key micro-markets such as AS Rao Nagar, Ameerpet, Punjaguta, Himayath Nagar, Begumpet and Somajiguda .
The city also recorded a new mall making 2,50,000 square feet available in the fourth quarter after a six-quarter gap in the main Kavadiguda submarket (Praga mall). This resulted in an increase in the overall vacancy rate from 19% to 22%. High-end malls continue to attract retailers, particularly for luxury gifts, high-end footwear, fashion and apparel.
Listed rents remained unchanged across the city and are expected to remain the same in the near term. However, high-end malls in some places such as Madhapur, Kukatpally, Banjara Hills, Kondapur and Himayat Nagar are expected to see a slight increase in rentals. Among all areas, mall rentals were highest in Banjara Hills and Madhapur at Rs 260 per square foot and Rs 235 per square foot respectively.