Credit ratings industry ICRA anticipates that robust sales in industries including beauty and fashion will cause malls’ trading values to rise by 4 per cent to 5 per cent in the 2024 fiscal year. ICRA anticipates that this would result in an increase in rental income of 8 per cent to 10 per cent this fiscal.
ICRA’s vice president and co-group head of corporate ratings Anupama Reddy said rental income for ICRA’s sample set experienced a significant increase of 78 per cent year-over-year in FY ’23 (on a lower base of FY ’22), and it is higher by 25–27 per cent compared to pre–Covid levels. This growth was fueled by a higher revenue share supported by an increase in retail trade values and increase in occupancy levels.
While mall foot traffic increased to 90–95 per cent of its pre–Covid levels in FY ’23, trading values rebounded to 125–127 per cent, supported by a rise in expenditure per visitor that was fueled by premiumisation, she added.
ICRA predicts that rental rates would rise by 3 per cent to 4 per cent throughout the course of this fiscal year. Since many Indian malls have experienced strong occupancy rates, this year’s lease renewals will be more expensive. ICRA has designated the situation of mall retail operators as ‘stable.’
“Higher disposable income and preference for experiential shopping, especially for premium product categories, are expected to support the retail malls in the medium term,” said Reddy.
Many fashion and beauty retailers are integrating interactive elements, such as AI-powered virtual assistants, in order to combine online and offline experiences and offer more than just shopping.
