The retail real estate market recorded a deferment of more than 30 per cent of retail mall space against the projected supply in the first half of 2012, according to a report by Cushman & Wakefield.
A fresh mall supply for H1 2012 stood at 2.27 million square foot (msf).
Approximately 1 msf of expected mall supply was deferred to second half of the year or next year, the commercial real estate services firm said.
The overall vacancy rate for the major cities as of H1 2012 stood at 19.6 per cent, marginally higher than the previous quarter.
National Capital Region saw the highest mall supply deferment of over 80 per cent, ensuring the city maintained vacancy levels at 28 per cent.
NCR saw only 120,000 sq ft of mall supply in Q1 and no supply in Q2 2012.
Bengaluru witnessed the highest mall supply of 1.5 msf in H1 2012.
The retail activity in the city continues to remain strong as the new mall supply became operational with 90 per cent occupancy, whilst overall city level mall vacancy stood at 12.6 per cent.
Jaideep Wahi, director, Retail Agency, C&W India said, "This slowdown in mall construction need not be viewed as a negative growth indicator for the retail real estate segment.
"The current pace is, in fact, expected to help in maintaining a healthier supply to demand equation; especially for oversupplied micro-markets".
With high vacancy levels as well as cautious expansion plans of retailers, the deferment of supply is a necessary measure to bring stability in the retail market, he said.
According to C&W, rental values across most mall destinations within these cities remained largely stable, except for certain micromarkets in Bangalore, NCR, Kolkata and Mumbai where mall rentals have seen a growth over the previous quarter in the range of 2-13 per cent.
Elgin Road in Kolkata recorded the highest growth in mall rents at 12.4 per cent over last quarter mostly owing to renewals of existing tenants at a higher value.
In the same period, some prominent high streets across major cities recorded higher increase in rental values as against malls, reflecting the bent of interest amongst retailers for high street properties, the report said.
