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Bangalore, May 5 The January-March ’09 quarter was a dull period for retail real estate with no fresh mall supply in the southern cities. In the first quarter of 2009, only 1.4 million sq ft of fresh mall supply was added across seven major cities — concentrated in Mumbai and NCR, according to a report by real estate services firm Cushman & Wakefield. The low supply trend is expected to continue the rest of the year and may help in maintaining a healthier supply to demand equation going forward, says the report.

The estimated mall supply by end of 2009 is calculated to be 17.66 million sq ft and approximately 11 million sq ft of the same has been carried forward from 2008.

The report attributes this inactivity in retail real estate to the slowdown in uptake of space by retailers, which led developers to reduce the speed of construction in projects already under way. A few other developers, who are yet to start construction of previously announced projects, may reconsider their retail mall plans further.

Bangalore witnessed no new supply, but there were some sporadic leasing activities in the existing malls keeping rentals across established locations such as Mysore Road and Vittal Mallya Road stable. Rental values in upcoming malls however recorded some correction.

Chennai did not witness any new mall supply and also saw very little retail real estate activity across the city. A decline of 8 per cent in mall rental values was recorded in the location of central Chennai, while western and southern regions remained stable. In the three prominent mall destinations of Hyderabad — NTR Gardens (29 per cent), Himayathnagar (25 per cent) and Banjara Hills No. 1 (28 per cent) — there was a significant correction in mall rentals due to restrained demand from retailers.

NCR witnessed the highest mall supply in the country, about 800,000 sq ft, with two malls starting operations during the period. Mumbai was the other significant contributor to mall supply with an addition of 305,000 sq ftin this period. However, it also recorded the highest mall rental correction, which was recorded in Goregaon (45 per cent).

More Stories on : Marketing Research | Real Estate & Construction | Karnataka

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