With popular locations for commercial spaces reaching a saturation point, SEZs and retail spaces set to move to the peripheral areas of the city.
RACHITA KAR and RENUKA RANE report – Times of India, Hyderabad.
Commercial spaces have played a major role in shaping Hyderabad into the metropolis that it is today. Over the years, commercial spaces in the city for IT/ITES, SEZs and retail have undergone great change. For a city that has not seen a radical growth in terms of commercial rentals in the past five years, the shift may signify an emerging trend in the city’s real estate landscape.
In 2010, there was a revival in demand for commercial spaces in Hyderabad from both IT and non-IT sectors. The absorption is estimated to be over 6 million sft and is still growing. “The requirement for SEZ space was huge in Hitech City and Gachibowli due to location and competitive pricing back then. The result is that there is limited space availability in SEZs in these areas. The SEZ spaces are now available in Uppal, Pocharam and Shamshabad and companies are looking at these newer locations considering the low rentals and decent infrastructure which is supported by residential and commercial development in the vicinity,” says Shivender Singh, Partner, GoodWill Co-ordinators.
Experts feel that, other than the IT sector, the growing demand from non IT sector(s) is another notable trend for 2012. “In retail, several large and medium format stores are likely to come up in Tier II cities across India. Several large and medium format retail stores will get operational in peripheries of the city such as Attapur, LB Nagar, Ramanthapur and Chandanagar by the end of 2012. The retail sector will experience a mall supply of eight lakh sft in Kukatpally area, of which nearly five to six lakh sft supply will be in the form of commercial complexes and standalone buildings in prime locations of the city. The demand is likely to go up as retailers change their strategy of expansion and operate at preferred locations,” says Kaustuv Roy, Executive Director, Cushman & Wakefield India.
Retail Boom with a Reason
Some of the retail hotspots in the city are Hitech City, parts of Gachibowli, Begumpet, Somajiguda, Raj Bhavan Road, S P Road, Vikrampuri, Himayathnagar, Kukatpally, and Dilshukhnagar. With greater demand for high-end retail space, the list seems to have exhausted in the city and remaining stock gets over in no time. Obviously, this was a matter of concern for retailers in the city. “Delaying decisions by even a few days meant diminished hopes of business expansion. There was simply not enough retail space to sell their wares. With delays in completion and few retail-conducive projects being launched, it was malls, malls everywhere and nowhere to go for retailers. So they have finally have started scouting for standalone properties. With their eyes on old mansions, mix-use buildings and small office blocks in established and emerging locations, big-format retailers and giant chains are mandating property firms to broker these deals to them,” says Ashutosh Limaye, Head-Research and Real Estate Intelligence Service, Jones Lang LaSalle India. High-market retail is now ready to expand after entering the city limits. Properties that are retrofitting enable retailers to start selling in no time and are fast becoming a rare commodity for big retail companies. “Even constructing glass cubes on plots that house the ‘building next door’ is seen as preferable over having to wait for properly located and configured malls to come along. In retail, stagnation is the same as dying and retailers have no intention of slipping into a market-induced coma,” adds Limaye. Moreover, stand-alone stores promise shoppers a personalized experience that malls often fail to provide.
Retail activity in the city has increased since 2011. With respect to inflow of new brands, retailers have expanded in Tier I, II and other smaller cities, besides expansion of hypermarkets. “Positive outlook on consumption expenditure and rising footfalls has led to the completion of large-scale organized retail mall supply across the country. Retailers continue to focus on high street destinations–those in prime micro-markets with a large catchment comprising a populace with a propensity to spend,” says Anshuman Magazine, CMD, CBRE South Asia Pvt Ltd. The increase in demand for commercial space in 2010-11, can be attributed to no fresh supply of stock. There was no vacancy in the existing malls as well. The demand for large format stores is picking up in the suburban locations. In Hyderabad, the peripherals markets such as Uppal and Shamshabad could witness a growth in demand over the next 3-5 years due to large-scale availability of Grade A office space and required infrastructure, and cheaper rentals.
Via : TOI