Bangalore:
Retail Market Report
BY SAYAN DAS
BY SAYAN DAS
BANGALORE RETAIL MARKET STATISTICS: 2013 AND BEYOND
7.65 million sqft
of operational shopping mall space
of which 7% is va...
EXECUTIVE SUMMARY
In past years, Bangalore’s retail journey has been
booming with several international & national brands ...
HISTORY OF RETAIL DEVELOPMENT IN BANGALORE
Before 1949
Bangalore had two distinct
administrative bodies:
Bangalore City
M...
1990 - 2005
Economic
Liberalization in 1991
In 1997, Government of
India (GoI) permitted
100% FDI in wholesale
cash and ...
GROWTH OF RETAIL SECTOR IN BANGALORE
5
In the past few years, Bangalore’s retail journey has been growing with several international and national brands setting-...
BANGALORE HIGH STREETS
Figure: Key High-Street locations of Bangalore
Byappanahalli
M G Road
1 M G Road
U B City
Bangalore...
The high-street locations of Bangalore have captured the retail trends and over the years have adapted to changing retail ...
BRIGADE ROAD
Figure: High-street Stacking: Brigade Road
Brigade Road
Apparel & Footwear Food & Beverages Books / Stationer...
Brigade Road forms the stretch between Cauvery Store on M.G.
Road and Opera House abutting Residency Road.
One of the most...
COMMERCIAL STREET
Figure: High-street Stacking: Commercial Street
Subanjali
Silks
Reliance
Trends
Commercial Street
Levis
...
Commercial Street emerged as a prominent retail street
serving the then Cantonment area mainly because of its
proximity to...
LAVELLE ROAD AND VITTAL MALLYA ROAD
Figure: High-street Stacking: Lavelle Road and Vittal Mallya Road
Reward
Dolphin Kidsw...
Lavelle Road high-street encompasses areas of Vittal Mallya
Road, Lavelle Road and Walton Road.
Once an upmarket, plush re...
INDIRANAGAR 100 FEET ROAD
Figure: High-street Stacking: Indiranagar 100 Feet Road
Indiranagar 100 Feet Road
Apparel & Foot...
Indiranagar 100 feet Road constitutes the stretch between
Domlur Junction (Stanley Boutique) and the Old Madras Road
Junct...
BANGALORE: SHOPPING MALL STATISTICS
Table: Shopping Mall Space Inventory (GLA in million sqft)
*
Micro-market
Total Mall S...
As of 2012, operational shopping mall space in the city is 7.65 million sqft; projected to double by 2016.
Emergence of Ba...
BANGALORE: SHOPPING MALLS
Malls in CBD
Operational Under Construction Planned
1 G Corp 1 MG Road 6 Suraj Cambridge Mall
2 ...
Bangalore: Shopping Mall Snapshot
NH 7: To Hyderabad
56
Bangalore International Airport
55
Yelahanka
43
NH 4: To Mumbai
BI...
SHOPPING MALL: CLASSIFICATION
21
Shopping malls in Bangalore can be predominantly categorized as neighbourhood, community and regional malls based on the
a...
SHOPPING MALL: CLASSIFICATION
2
Until the last decade, development of malls was at a nascent stage. However, with the progress of the city’s retail infras...
SHOPPING MALL: PRODUCT CATEGORY DISTRIBUTION
25
Malls in the city are largely anchored around an Apparel and Footwear brand and / or a Hyper-market chain. Entertainment a...
SHOPPING MALL: RENTALS
27
Shopping mall in SBD offer an advantage as compared to malls in CBD owing to high ATD, substantial footfalls, better mall
...
OUTLOOK
By 2015, Bangalore is expected to witness an addition of nearly
5.60 million sqft; PBD locations account for nearl...
TERMS OF REFERENCE
CLASSIFICATION of the city: To understand the characteristics of the retail spaces across Bangalore, th...
TERMS OF REFERENCE
Definitions
High-Street
Shopping Malls
Areas covered within the micro-markets
A high-street refers to t...
TERMS OF REFERENCE
Operating Costs
Tenants follow the following rental models:
Rent
Maintenance Charges
Utilities
Insuranc...
GLOSSARY
IT Information Technology
ITeS Information Technology enabled Services
INR Indian Rupee
BCC Bangalore City Corpor...
Bangalore Retail Market
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Bangalore Retail Market

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Detailed Study on Bangalore Retail Market, done during the month of August '13

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  1. 1. Bangalore: Retail Market Report BY SAYAN DAS BY SAYAN DAS
  2. 2. BANGALORE RETAIL MARKET STATISTICS: 2013 AND BEYOND 7.65 million sqft of operational shopping mall space of which 7% is vacant 12% 5% to is the avg. annual growth rate of mall rentals since 2010 5.67 million sqft of under-construction mall space of which 45% is pre-booked 9% 5% to is the avg. annual growth rate of high-street rentals since 2009 13.79 million sqft of planned mall space 16K 3K to is the Annual Avg. Trading Density per Useable Carpet Area for shopping malls 1
  3. 3. EXECUTIVE SUMMARY In past years, Bangalore’s retail journey has been booming with several international & national brands setting-up their stores in the city. Favourable demographics, robust economy, rising per capita income, easy availability of credit & large scale retail developments have fueled the growth of Bangalore’s retail market. Bangalore today houses large format retail malls catering to the luxury segment as well as value shoppers. The city is a prefered retail destination in the country after Mumbai and Calcutta. As of 2012, total operational mall space in the city is added to be 7.65 million sq.ft and the vacancy is 7%. Significant residential activity & availability of land fuelled the development of shopping malls in SBD & PBD locations of the city. In terms of GLA, PBD and SBD respectively account for 48% and 42% of the total shopping mall space while CBD locations occupies 10% of the total mall space in the city. Bangalore in present houses neighbourhood, community and regional malls. Mantri Mall at Malleshwaram, Phoenix Mall at Whitefield & Orion Mall at Dr. Rajkumar Road are key regional malls while The Forum at Koramangala & Meenakshi Mall at Bannerghatta Road are prominent malls in the city. Among the PBD locations, residential micro-market of ORR - Sarjapur has an opportunity for development of shopping malls. Whitefield on the other hand has substantial operational mall space and accounts for large percentage of total operational space Amongst PBD . Location of Mysore Rd, Bannerghatta Rd, Tumkur Rd & Hosur Road are in balanced state with retail activity in these locations complementing the residential activities. Retail activities across Bangalore North and Old Madras Road (OMR) are booming and have retail infrastructure development potential in the upcoming years. BANGALORE: RETAIL MAKET REPORT 2 Malls across the city are essentially anchored around a department store & / or a hyper-market or super-market chain. Few years ago, entertainment in the shopping malls was limited to multiplexes however; entertainment is now growing to a status of being an important anchor. Brigade Orion at Rajajinagar and Park Square in Whitefield along with multiplexes have roped in various gaming retailers. Wholesale retails is one of the emerging formats in Bangalore. Conducive Government regulation have led to the entry of many such players in the city and several new brands are progressively venturing into the city’s retail market. Future Group with Salarpuria Sattva Group is set to launch first of its kind wholesale market - World Market on Old Madras Road in the city. Luxury retail has come as a new concept here at the establishment of UB City at Vittal Mallya Rd. This segment has witnessed slow but steady growth. However, the presence of luxury retail is expected to be restricted to the CBD & SBD locations. Shopping mall formats in the city continue to develope over time. One MG Road, in CBD is designed as an enclosed strip mall and lately Karle Properties is planning to develop a Town Center, which is a combination of open-air / high-street and an enclosed mall format. Rental values in shopping malls in the city are expected to witness a steady growth within 1 - 3 years, owing primarily to a steady increase in the metropolitan population and relaxation of FDI rules. High-street locations will carry on to coexist with the malls in the city despite infrastructure issues and increase in mall space. Rental values across high-street locations are likely to witness nominal growth in short term.
  4. 4. HISTORY OF RETAIL DEVELOPMENT IN BANGALORE Before 1949 Bangalore had two distinct administrative bodies: Bangalore City Municipality (BCM) & Bangalore City Military Station Municipality (BCMSM) 1950 - 1970  Formation of Bangalore City Corporation (BCC) Retail developments in the city were mainly spread across two prominent clusters : Akkipet, Ballepet, Chickpet, Cubbonpet, Avenue Road and other markets in petta region catered to the retail needs of people in old Bangalore Shivajinagar, MG Road, Commercial Street and Ulsoor were key retail destinations serving the Cantonment area  Areas around Brigade Road gained prominence as key destinations for entertainment mainly due to presence of Opera House. Various theatres by integration of BCM and BCMSM 1970 - 1990 Formation of Bangalore Development Authority  in 1976 led to development of new residential layouts namely Jayanagar, HSR Layout and BTM Layout namely Galaxy, Blue Moon, Rex and Plaza theatre commenced operations during this time. BDA developed neighbourhood shopping centres (BDA complexes) with retail shops to cater to the daily needs of residents within the layout. Jayanagar BDA complex was the first BDA complex to commence operations in 1978, followed by Indiranagar and Koramangala BDA Complexes. 3
  5. 5. 1990 - 2005 Economic Liberalization in 1991 In 1997, Government of India (GoI) permitted 100% FDI in wholesale cash and carry retail format 2006 - 2012 Government of India (GoI) allows 51% FDI in  single brand retail in 2006 Completion of Bangalore  International Airport at Devanahalli in 2008 led  to opening up of land parcels for development towards Bangalore North 2013 & Beyond In 2012, Government of India (GoI) allows 100% and 51% FDI in single and multi- brand retail respectively Economic Liberalization in 1991 led to entry of various international brands in the city. Nike, Reebok, Adidas and KFC set-up their stores along high-street of Brigade Road and Commercial Street. Brigade Road started transforming in to a retail high street of the city; Mota Royal Arcade and 5th Avenue were among the first few modern format retail shopping centres to commence operations during this period In 2003, Metro Cash and Carry opened its stores at Yeshwantpur and Kanakpura Road Bangalore’s first mall - The Forum Mall at Koramanagala was operational in 2004 . Emergence of Indiranagar 100 Feet Road as a preferred high-street location within SBD. Increase in demand for mall space led to development of newer malls primarily in CBD and SBD locations. Garuda Mall and Sigma Mall were among the prominent malls to commence operations during 2006 - 07 UB City at Lavelle Road became Bangalore's first luxury shopping mall to start operations in 2008. With completion of UB City, Lavelle Road graduated to become a luxury high-street location in the city In 2009, Bangalore witnessed completion of Forum Value Mall at Whitefield, the city's first value format mall Development of regional malls - Phoenix Market City at Whitefield, Mantri Square at Malleshwaram and Brigade Orion at Dr. Rajkumar Road started operations between 2009 - 11 FDI in retail paves way for entry of international retailers and funds City expected to witness entry of major brands like Carrefour, Walmart, IKEA BANGALORE: RETAIL MAKET REPORT 4
  6. 6. GROWTH OF RETAIL SECTOR IN BANGALORE 5
  7. 7. In the past few years, Bangalore’s retail journey has been growing with several international and national brands setting-up their retail stores in the city. Favorable demographics, robust economy, rising per capita income, easy availability of credit and large scale retail developments have fueled the growth of Bangalore’s retail market. Growth in the IT/ITeS industry has led to migration of the educated middle-class to the city, consequently steering residential developments as well. Bangalore’s residential market witnessed an annual absorption of24,000 residential units during calendar year2012 and the residential market is projected to grow at an annual growth rate of 15%, making the city one of the most promising residential markets in the country. Growing Population At 9.6 million, Bangalore urban district is the fifth most populous urban district in India as of 2011. It registered a decadal growth rate of 47% as compared to 2001. The city is expected to continue its growth trajectory; and population for the year 2021 is pegged at 14.0 million. Robust Economy and Growing Per-capita Income: Bangalore’s economic development is attributed to the healthy growth of its IT/ITeS industry. Currently the sector accounts for more than 1.0 million jobs in the city and will continue to add over 100,000 jobs every year for next 3 - 5 years. Apart from IT/ITeS sector, the city is also witnessing advancements in the field of biotechnology, aerospace and aviation sectors. Robust economy, growing population and high disposable incomes have led to emergence of the city as a preferred retail destination by both national and international brands and over the years, retail spaces in the city have witnessed an evolution in terms of design and quantum of spaces. Bangalore today is the most sought after retail destination in the country after Mumbai and Delhi mainly due to the following reasons: The growth in the IT/ITeS sector has been well supported by the growth in the per-capita income of the city. As per 1 McKinsey , by 2030 Bangalore is likely to have the highest per-capita GDP among all the Indian cities. Shift from necessities to lifestyle products: Retail growth in the city is linked to consumer needs and behavior. Rising income levels and global exposure have resulted in increased purchasing power. Additionally, consumer spends have shifted to lifestyle products and services from daily necessities. 1McKinsey - McKinsey Global Institute - India's Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth, published in April 2010. BANGALORE: RETAIL MAKET REPORT 6
  8. 8. BANGALORE HIGH STREETS Figure: Key High-Street locations of Bangalore Byappanahalli M G Road 1 M G Road U B City Bangalore Club Existing Malls Key high-street locations Metro Station Metro Rail Phase I - Reach 1 (Operational) Metro Rail Phase I - UG2 (Under-Construction) Garuda Mall 7
  9. 9. The high-street locations of Bangalore have captured the retail trends and over the years have adapted to changing retail needs and consumer aspirations. Despite offering better brand visibility as against a shopping mall, key challenges faced by these locations include traffic congestion, lack of parking space and unobstructed pedestrian walkways. A high-street synonymous with a market or bazaar is a prime retail hub in a city with street aligned retail stores. These are predominant avenues for retail, trading and entertainment activities. Early high-street locations of Brigade Road and Commercial Street have been in existence since 1950s are located in close proximity to the CBD. With the spatial expansion of the city, the high-street locations are no longer confined to the CBD area. During the last decade prominent high street locations of Indiranagar 100 feet Road, Jayanagar 11th Main Road, New BEL Road and Marathahalli have emerged towards the Secondary Business Districts (SBD) and Peripheral Business Districts (PBD). The high-streets of the city exhibit distinct characteristics and cater to a diverse target segment. Brigade Road and Commercial Street continue to remain the most sought after high-street locations in the city; Lavelle Road2attracts High Networth Individuals (HNIs) and super rich of the city, offering niche and exclusive products. Marathahalli over the years has developed as a location for discount / outlet stores, whereas, New BEL Road has emerged as an important high-street location catering to residential areas of Sanjaynagar, Sadashivnagar and Rajajinagar. Of the SBD locations, Indiranagar 100 feet Road has evolved from an upmarket plush residential location to one of the most preferred retail destinations by both national and international brands. High-street locations of Jayanagar and Malleshwaram continue to interest retailers in the women’s apparel, gems and jewelry segment. Key areas witnessing increased retail activities in Bangalore North include Kamanahalli Main Road and Sahakarnagar while Marenahalli Road (JP Nagar - ORR stretch) towards south- west of the city is gaining prominence as a retail high-street mainly due to limited shopping mall space in the vicinity. During 2009 - 12, rental values across high-street locations of the city grew annually in the range of 5 - 9%mainly due to limited upcoming supply and lower vacancy rates. 2Lavelle Road includes areas of Lavelle Road and Vittal Mallya Road Bangalore’s high-street locations continue to attract national and international retail brands regardless of increased mall space in the city due to higher brand visibility and considerable footfalls. However, traffic congestion, lack of unobstructed pedestrian walkways and limited parking facilities are some of the basic concerns that require improvement. When profiling of tenants3in select high-street locations of the city- a key observation was high-street locations are preferred mainly by Apparel and Footwear Tenants followed by Food and Beverages(F&B), and Electronic Goods, reason being consumer buying trends and real estate cost. Characteristics of four prominent high-street locations in the city - two established high-streets and two having evolved in the last of couple of years have been addressed in the study. Figure: Product Category Distribution: High-Streets 7% 3% 9% 4% 54% 7% 16% Apparel & Footwear Food & Beverages Electronic & White Goods Books / Stationery / Gifts Others Personal Care / Watches / Jewellery Automobiles 3Profiling of tenants is based on the number of stores and area of the stores has not been considered for the same. BANGALORE: RETAIL MAKET REPORT 8
  10. 10. BRIGADE ROAD Figure: High-street Stacking: Brigade Road Brigade Road Apparel & Footwear Food & Beverages Books / Stationery / Gifts Electronic & White Goods Others Personal Care / Watches / Jewellery Note: High-street stacking map indicated above represents the brand layout as of December 2012 and is subject to change with time. Map not to the scale. 9
  11. 11. Brigade Road forms the stretch between Cauvery Store on M.G. Road and Opera House abutting Residency Road. One of the most prominent high-street locations of Bangalore, Brigade Road has been in existence since the British era. During 1970 - 80s, this high-street gained prominence as an entertainment hub of the city with existence of theatres namely Opera House and Rex. This high-street also boasts of first few shopping complexes in the city; Mota Royal Arcade and Fifth Avenue are operational since early 1990s. Presence of shopping complexes strengthened Brigade Road as a high-street location and over the years this location has emerged as the most preferred location for any new brands venturing into city. The high-street houses flagship stores of various retail brands and is dominated largely by Apparel and Footwear brands. This high-street in coming years will continue to attract retailers owing to improved connectivity with the completion of Metro Rail Phase I. This is certain to boost footfalls across this location. Due to limited availability of new supply and low vacancy rates, rental values across this high-street location are expected to increase nominally in short to medium term. Figure: Product Category Distribution: Brigade Road 6% 9% 7% 53% 7% 18% Apparel & Footwear Food & Beverages Electronic & White Goods Books / Stationery / Gifts Others Personal Care / Watches / Jewellery Brigade Road Operational Since Driving Factor Shop Size (sqft) Existing Shopping Malls in proximity Advantages Concerns Rental Values4(INR/sqft/month) Ground Floor Average Annual Rental Appreciation 5 6 1980s Location; proximity to MG Road; one of the early high-street locations 1,000 - 10,000 Garuda Mall (0.5 km), 1 MG Road (2 km) Prime location, easily accessible, connectivity via Metro Rail Limited parking space, one - way traffic allowed, no public transport along the high-street 350 - 450 9% Capital Values (INR/sqft) 30,000 - 40,000 4Rental Values indicated are on carpet area for a 1,000 sqft store on Ground Floor with an efficiency of 80% 5Average annual rental appreciation figures are considered for the period between 2009 - 2012 6In the event of non-availability of sale transactions Capital Values have been derived considering average annual rent and yield rate of 11% BANGALORE: RETAIL MAKET REPORT 10
  12. 12. COMMERCIAL STREET Figure: High-street Stacking: Commercial Street Subanjali Silks Reliance Trends Commercial Street Levis Metro Ice creams Catwalk Davanam Apparel & Footwear Food & Beverages Electronic & White Goods Others Reid & TaylorBooks / Stationery / Gifts Manyavar Personal Care / Watches / Jewellery Note: High-street stacking map indicated above represents the brand layout as of December 2012 and is subject to change with time. Map not to the scale. 11
  13. 13. Commercial Street emerged as a prominent retail street serving the then Cantonment area mainly because of its proximity to Shivaji Nagar. Earlier, this high-street was essentially a traditional market characterized by small format retail stores. Commercial Street now accommodates contemporary brands and modern format retail stores while simultaneously retaining its character and the traditional bazaar feel. This high-street endures sizeable retail stores mainly targeting women’s apparel and accessories segment. There are no operational or planned malls in this high-street; existing department stores along this high-street include Westside and Max. Key challenges faced by this high-street is lack of availability of parking slots leading to congestion during peak shopping hours and weekends. Rental values across this high-street location are likely to continue to the existing growth trend mainly due to lack of newer retail spaces and lower vacancy rates. Figure: Product Category Distribution: Commercial Street 6% 5% 6% 2% 7% 74% Apparel & Footwear Food & Beverages Electronic & White Goods Books / Stationery / Gifts Others Personal Care / Watches / Jewellery Commercial Street Operational Since Driving Factor Shop Size (sqft) Existing Shopping Malls in proximity Advantages Concerns Rental Values7(INR/sqft/month) Average Annual Rental Appreciation 9 Capital Values (INR/sqft) 1950s Proximity to established markets - Shivajinagar and Russel Market 500 - 30,000 Garuda Mall (2.5 km), 1 MG Road (2.0 km) Prime location, easily accessible Smaller format retail stores, limited parking space, congested during peak hours and no entertainment options Ground Floor 300 - 325 8 9% 26,000 - 28,000 7Rental Values indicated are on carpet area for a 1,000 sqft store on Ground Floor with an efficiency of 80% 8Average annual rental appreciation figures are considered for the period between 2009 - 2012 9In the event of non-availability of sale transactions Capital Values have been derived considering average annual rent and yield rate of 11% BANGALORE: RETAIL MAKET REPORT 12
  14. 14. LAVELLE ROAD AND VITTAL MALLYA ROAD Figure: High-street Stacking: Lavelle Road and Vittal Mallya Road Reward Dolphin Kidswear Scent Cinebells Le Creuset Galleria Time & Space I art Harley Davidson Showroom Kaya Skin Clinic Vittal Mallya Road Chemistry Crisp Oryza Spa Hakims Aalim Java City Cloud Bar The Biere Club Cinnamon Limelight La Cristaal Sunny’s Ruosh, Bounce Walton Road UB City N S Jewellers Café Coffee Day,Forest Essential Biguine Paris Saloon & Spa Ferns N Petal Porsche Showroom Honda Showroom Apparel & Footwear Food & Beverages Maruti Suzuki Showroom Electronic & White Goods Books / Stationery / Gifts Others Personal Care / Watches / Jewellery Automobiles Note: High-street stacking map indicated above represents the brand layout as of December 2012 and is subject to change with time. Map not to the scale. 13
  15. 15. Lavelle Road high-street encompasses areas of Vittal Mallya Road, Lavelle Road and Walton Road. Once an upmarket, plush residential area, Lavelle Road currently has established itself as a luxury high-street of Bangalore. In early 2000s, this high-street had a few exclusive restaurants and lounges. Completion of UB City in 2008 and proximity to affluent neighbourhood triggered the development of luxury retail spaces along this high-street location. An upmarket retail high-street, it is marked by the presence of signature stores of various luxury apparel brands and luxury spas & salons. Additionally it is also witnessing the opening up of luxury automobile showrooms namely BMW Cars, Porsche and Harley Davidson. Key under-construction retail buildings in this high-street include Bagmane Ventures (0.02 million sqft). Lavelle Road will continue to remain a luxury destination of the city with various luxury brands eyeing to enter Bangalore. Rentals across this high-street are likely to retain the past growth trend in short term. Figure: Product Category Distribution: Lavelle Road and Vittal Mallya Road 9% 9% 33% 3% 18% 3% 25% Apparel & Footwear Food & Beverages Electronic & White Goods Books / Stationery / Gifts Others Personal Care / Watches / Jewellery Automobiles Lavelle Road and Vittal Mallya Road Operational Since Driving Factor Shop Size (sqft) Existing Shopping Malls in proximity Advantages Concerns 10 2000s Development of UB City and proximity to affluent locality 2,000 - 12,000 UB City Prime Location and an upmarket neighbourhood, pedestrian friendly Non - availability of public transportation Rental Values (INR/sqft/month) Ground Floor 200 - 265 11Average Annual Rental Appreciation 6% Capital Values (INR/sqft) 12 17,500 - 23,000 10Rental Values indicated are on carpet area for a 1,000 sqft store on Ground Floor with an efficiency of 80% 11Average annual rental appreciation figures are considered for the period between 2009 - 2012 12In the event of non-availability of sale transactions Capital Values have been derived considering average annual rent and yield rate of 11% BANGALORE: RETAIL MAKET REPORT 14
  16. 16. INDIRANAGAR 100 FEET ROAD Figure: High-street Stacking: Indiranagar 100 Feet Road Indiranagar 100 Feet Road Apparel & Footwear Personal Care / Watches / Jewellery Food & Beverages Electronic & White Goods Others Books / Stationery / Gifts Note: High-street stacking map indicated above represents the brand layout as of December 2012 and is subject to change with time. Map not to the scale. 15
  17. 17. Indiranagar 100 feet Road constitutes the stretch between Domlur Junction (Stanley Boutique) and the Old Madras Road Junction. During its inception, this area was conceptualized as a residential area. Post amendment in the zoning regulations that facilitated development of commercial / retail properties, this area started witnessing an increase in retail activity primarily opening of restaurants, cafes and lounges. Over the years, the high-street has witnessed penetration of various brands in Apparel and Footwear, Electronic Goods segment apart from the F&B segment. As compared to other high-streets of Bangalore, Indiranagar 100 feet Road has a better planned layout, well laid pedestrian walkways as well as free parking facility. Areas around 12th Main command higher rents as opposed to areas around Domlur flyover or near CMH Road. Additionally, completion of Metro Rail Phase I in this region has improved connectivity between CMH Road to Domlur Junction. However, it has adversely impacted the stores between Old Madras Road and CMH Road by reducing their visibility. In the coming year rental values across this high-street are likely to continue the past growth trend. Figure: Product Category Distribution: Indiranagar 100 feet Road 11% 7% 37% 10% 9% 26% Apparel & Footwear Food & Beverages Electronic & White Goods Books / Stationery / Gifts Others Personal Care / Watches / Jewellery Indiranagar 100 Feet Road Operational Since Driving Factor Shop Size (sqft) Existing Shopping Malls in proximity Advantages Concerns 13 1990s Proximity to an affluent residential catchment 1,500 - 12,000 Gopalan Signature Mall (3 km) Easily Accessible, connectivity via metro, free car-parking and affluent catchment Traffic Congestion during peak hours; limited availability of car parks Rental Values (INR/sqft/month) Ground Floor 175 - 220 Average Annual Rental Appreciation 14 5% Capital Values (INR/sqft) 15 15,000 - 19,500 13Rental Values indicated are on carpet area for a 1,000 sqft store on Ground Floor with an efficiency of 80% 14Average annual rental appreciation figures are considered for the period between 2009 - 2012 15In the event of non-availability of sale transactions Capital Values have been derived considering average annual rent and yield rate of 11% BANGALORE: RETAIL MAKET REPORT 16
  18. 18. BANGALORE: SHOPPING MALL STATISTICS Table: Shopping Mall Space Inventory (GLA in million sqft) * Micro-market Total Mall Space CBD SBD North - East South - East South - West North - West PBD Whitefield ORR - Sarjapur Bannerghatta Road Kanakpura Road Mysore Road Tumkur Road Bangalore North Hosur Road Old Madras Road Operational Area Stock Vacancy 7.65 0.50 0.78 0.07 3.19 0.14 0.41 0.06 0.69 0.03 0.40 0.03 1.69 0.02 3.68 0.29 2.53 0.24 0.31 - 0.38 - - - 0.34 - - - 0.12 0.05 - - - - Under-construction Area Planned Mall Space Stock Vacancy 5.67 3.06 13.79 0.31 0.31 - 1.46 0.79 1.82 0.32 0.20 0.80 0.42 0.02 - 0.72 0.57 0.62 - - 0.40 3.90 1.96 11.97 0.87 0.30 1.58 - - 2.50 - - 0.80 0.45 0.28 2.27 - - 0.45 0.25 0.15 0.30 0.80 0.60 2.45 1.35 0.45 0.80 0.18 0.18 0.82 Figure: Shopping Mall Space Statistics 14 Vestian Estimate 12 10 8 7.65 13.79 6 4 7.15 5.67 2 2.61 0 Operational Under-Construction Planned Mall Space Mall Space Mall Space Stock Occupied *The city has been categorized into three major micro-markets - CBD, SBD and PBD. Please refer Terms of Reference for spatial classification of the city. 17
  19. 19. As of 2012, operational shopping mall space in the city is 7.65 million sqft; projected to double by 2016. Emergence of Bangalore as a preferred retail destination led to entry of several national and regional developers. Key developers including Phoenix Mills Limited, Brigade Group and Mantri Group continue to expand their retail portfolio in the city. The city today has more than 20 operational shopping malls accounting for 7.6516million sqft. Non-availability of large land parcels in CBD locations and significant residential activity in PBD locations has led to increased development of shopping malls along PBD locations. In terms of Gross Leasable Area (GLA)17, PBD and SBD account for 48% and 42% respectively of the total shopping mall space and CBD locations contribute to 10% of total mall space in the city. Secondary Business District (SBD) locations over the past few years have witnessed increased supply of large land parcels for redevelopment paving the way for development of shopping malls. Retail activity in this micro-market is expected to continue the growth trajectory mainly due to growing catchment area, limited mall space in CBD locations, availability of large land parcels for development and enhanced connectivity via Metro Rail phase I. Key malls that commenced operations in last one year in SBD locations include Brigade Orion (0.75 million sqft) at Dr. Rajkumar Road and Mantri Square (0.93 million sqft) at Malleshwaram. Amongst the PBD locations, established residential location of ORR - Sarjapur provides opportunity for development of shopping malls in short term, while Whitefield on the other hand has witnessed substantial penetration of retail activity. Locations of Hosur Road, Bannerghatta Road, Kanakpura Road, Mysore Road andTumkur Road support retail infrastructure complementing the residential activities. Retail activity in Bangalore North and Old Madras Road (OMR) is burgeoning and these micro-markets have high potential for development of shopping malls in medium to long term. Whitefield accounts for highest mall space; it constitutes nearly 69% of total mall space in PBD locations. Whitefield over the years has emerged as a self-sustaining location with commercial, residential and retail developments. Key operational malls in this location include Inorbit Mall (0.34 million sqft), Phoenix Market City (0.97 million sqft) and Park Square Mall (0.45 million sqft). Owing to significant existing and impending mall space, Whitefield exhibits lesser potential for development of new malls in short to medium term. Although ORR-Sarjapur stretch is one of the most promising residential locations of Bangalore, the location is currently dependent on SBD locations for its retail needs. Soul Space Spirit(0.3 million sqft) is the only operational mall in this location. With no malls under construction, this location is highly suitable for development of shopping malls in short term. Kanakpura Road currently lacks presence of shopping malls, but has substantial under-construction and planned mall space. Key shopping malls in advanced stage of planning include Mantri Arena (0.82 million sqft), and Puravanakara Mall (0.45 million sqft). Lack of availability of land for development, restricted land- use zoning and proximity to SBD locations of Koramangala and Jayanagar are key reasons that have restricted the development of malls in Bannerghatta Road. Currently the location has one operational mall Royal Meenakshi Mall (0.34 million sqft). This location has limited potential for development of malls mainly due to significant mall supply in SBD locations. Mysore Road currently accounts for nearly 0.5 million sqft of operational mall space. The malls here mainly cater to daily requirements, lacking entertainment and fine-dining options. Limited residential activity in this location has restricted development of malls in this micro-market and has limited upcoming and planned mall space. Growth in residential activity over the past few years has led to increased retail demand along Tumkur Road and this location is a potential destination for mall activity. Currently, the location does not have any operational mall, but houses Metro Cash and Carry Outlet (Cash and Carry format). Vaishnavi Sapphire (0.25 million sqft) is one of the key malls likely to be operational by2013 end and BIG Shopping Center is expected to open their flagship store BIG (0.42 million sqft) in this location. Limited residential activities along Hosur Road has restricted the development of malls in this region. Presently, there are no operational malls, however, with a few large-scale residential projects coming up and with the proposed Metro Rail phase II- this location is set to witness increased retail activity. Neo Mall (1.35 million sqft) at Patel Neo Town is among the key upcoming malls in this location. Old Madras Road, of-late has witnessed increased residential activity with major Class A developers launching their residential projects. Currently, not many retail projects are planned in this micro-market however; retail activity across this micro-market is anticipated to gain momentum in the medium to long term. Salapuria Sattva Group is set to launch the World Market (1.0 million sqft) in this location. Despite commercial activity in Bangalore North being in nascent stage, this region has witnessed increased residential supply. Shift in the developers’ interest towards this location has made way for many planned retail projects. Key developers including Brigade Group, MFAR Holdings, Century Group and Ozone Group have planned shopping malls in Bangalore North. 16Indicates Gross Leasble Area (GLA); unless and otherwise mentioned in the report mall size is indicated in terms of GLA 17GLA is the total floor area designed for a tenant’s occupancy and exclusive use, including basements, mezzanines, or upper floors measured from the center-line of joint partitions and from outside wall faces. It is the space, including sales area and integral stock areas for which tenants pay rent. BANGALORE: RETAIL MAKET REPORT 18
  20. 20. BANGALORE: SHOPPING MALLS Malls in CBD Operational Under Construction Planned 1 G Corp 1 MG Road 6 Suraj Cambridge Mall 2 EVA Mall 7 Embassy Galaxy Mall 3 Garuda Mall 4 The Collection 5 Sigma Mall Malls in SBD Operational Under Construction Planned 8 Salarpuria Oasis Mall 17 Vega Mall 21 Sobha Grand Mall 9 The Forum 18 City View 22 Karle Mall 10 Swagath Garuda 19 Orion Mall - 2 23 Nitesh Mall 11 Gopalan Innovation Mall 20 World GT Mall 12 Mantri Junction 13 Mantri Square 14 Orion Mall 15 Gopalan Signature Mall 16 Leela Galleria Malls in PBD Operational Under Construction Planned 24 Soul Space Arena 35 Grand Mall & Towers 44 Gopalan Destination Mall 25 Phoenix Market City 36 Virtuous Xander Mall 45 Prestige Technostar 26 Inorbit Mall 37 Forum Shantiniketan Mall 46 MBD Zephyr 27 Park Square 38 Salarpuria World Market 47 Mantri Mall, Agara 28 The Forum Value Mall 39 Neo Mall 48 Raheja INXS Mall 29 Cosmos Mall 40 Gardens Galleria 49 Perk In Mall 30 Soul Space Spirit 41 Vaishnavi Sapphire 50 Prestige Falcon City 31 Royal Meenakshi Mall 42 MSR Regallia Elements 51 Mantri Mall, Kanakpura 32 Gopalan Arcade Mall 43 RMZ Galleria 52 Puravankara Mall 33 Gopalan Legacy Mall 53 Lotus Mall 34 Esteem Mall 54 Karle Town Center 55 Monarch Celestial 56 Century Istana High Street 19
  21. 21. Bangalore: Shopping Mall Snapshot NH 7: To Hyderabad 56 Bangalore International Airport 55 Yelahanka 43 NH 4: To Mumbai BIEC HMT Township Hesaraghatta Cross 22 41 RMV Extension Peenya Industrial Area 14 18 Malleshwaram 34 Hebbal 42 54 NH 4: To Chennai Nagawara 38 Palace 13 Rajaji Nagar 20 Grounds Banaswadi 19Frazer Town Byppanahalli 5 1 MG Road 6 23 Krishnarajapuram 36 25 37 15 27 45 44 ITPB 46 26 21 Vijayanagar 33 7 Indiranagar Bangalore City 4 24C.V.Raman Railway Station Richmond Nagar Town 3 2 8 16 Brookefield EPIP ZONE WHITEFIELD 29 35 28 Marathahalli Varthur Mysore Road 53 32 Banashankari Kengeri SH 17: To Mysore 12 Puttenahalli 40 51 52 Jayanagar Koramangala 9 10 J.P. Nagar 11 17 BTM Layout 50 31 30 47 Bellandur 48 Sarjapur Road HSR Layout Begur 49 Thalagattapura Gottigere NH 209: To Coimbatore ELECTRONIC CITY PHASE I & II 39Bommasandra NH 7: To Salem Outer Ring Road Metro Rail Under Construction Key Residential Areas NICE Ring Road Proposed Peripheral Ring Road Metro Rail Operational Elevated Express Highway BANGALORE: RETAIL MAKET REPORT 20
  22. 22. SHOPPING MALL: CLASSIFICATION 21
  23. 23. Shopping malls in Bangalore can be predominantly categorized as neighbourhood, community and regional malls based on the anchor tenant, GLA and size of the trade area it serves. International Council of Shopping Centers (ICSC) defines a shopping mall as a group of retail establishments that is planned, developed, owned and managed as a single property with on-site and basement parking. Shopping mall’s size and orientation are generally determined by the market characteristics of the trade area served by the mall. Shopping malls can be classified based on its tenancy mix and size of the trade area it serves, not solely on the GLA of the mall. Adapting from the definition as suggested by Urban Land Institute(ULI) and ICSC, shopping malls in the city can essentially be categorized as: Neighbourhood Mall: Neighbourhood mall focuses on convenience goods that meet the daily needs of an immediate neighbourhood. Usually anchored by a super-market, neighbourhood malls tend to serve a trade area within 2 - 3 km radius and GLA for these malls range between 100,000 - 300,000 sqft of GLA. Gopalan Arcade Mall (0.16 million sqft) and Gopalan Legacy Mall (0.18 million sqft)are prominent neighbourhood malls in the city. Elements Mall with Auchan hyper-market as one of its anchor tenant and Vaishnavi Sapphire Mall with More super- market as its anchor tenant are among the key upcoming neighbourhood malls. Community Mall: Community mall while providing daily necessities also offer a wider range of merchandise, home furnishings and entertainment options than the neighbourhood mall. Forum Mall (0.36 million sqft) at Koramangala, Royal Meenakshi Mall at Bannerghatta Road (0.38 million sqft) are among the operational community malls in the city. Forthcoming Vega City Mall (0.42 million sqft) on Bannerghatta Road is likely to evolve as a community mall. Regional Mall: A regional mall offers a wider range in terms of retail category, entertainment and food. This kind of a retail development depending on its tenancy mix has a potential to cater to the trade area ranging from 5 - 15 km. Brigade Orion at Dr. Rajkumar Road (0.75 million sqft), Mantri Square at Malleshwaram(0.933 million sqft) and Phoenix Market City (0.97 million sqft) at Whitefield are categorized as regional malls. Planned mall by Nitesh Estates at Indiranagar (0.8 million sqft) and Mantri Mall (1.20 million sqft) at Agara Junction are likely to be positioned as regional malls by virtue of its size thereby catering to a larger catchment. Specialty Mall: A specialty mall employs a unifying theme that is carried out by the retail stores in their merchandize. These malls may rely on discretionary income expenditures and provide one- stop shopping experience for a specific product type or price segment. These malls could be anchored by an upmarket / premium Multi-Brand Outlet (MBO) format while fine dinning and leisure also play a key anchor role. The Collection - UB City at Vittal Mallya Road can be categorized as a Specialty mall designed as a Luxury Mall. Upcoming malls with alike theme in the city include Galaxy (0.19 million sqft) by Embassy Group at Residency Road and City View by Westcourt Real Estate (0.06 million sqft) on Bellary Road. However, specialty malls focusing exclusively on sale of home and furnishing products, cars and auto-accessories, gold or electronic and white goods are currently un-explored in the city. Table below compares the broad indicators to define the shopping malls. Table: Basic characteristics of Shopping Malls Type of Mall Neighbourhood Mall Community Mall Regional Mall Anchor Tenants Super-market / Hyper-market chain Department Store / Hyper-market / Multiplex 1 or 2 Department Store / Multiplex / Entertainment Retailers GLA (sqft) Trade Area Radius 100,000 - 300,000 2 - 3 km 200,000 - 500,000 3 - 5 km 600,000 - 10,00,000 5 - 15 km BANGALORE: RETAIL MAKET REPORT 22
  24. 24. SHOPPING MALL: CLASSIFICATION 2
  25. 25. Until the last decade, development of malls was at a nascent stage. However, with the progress of the city’s retail infrastructure towards a differential phase, Bangalore is expected to see entry of new mall formats including a Strip Mall and a Town Center. Over the years, shopping malls in the city have continually invented a variety of additional real estate products to accommodate advancing trends in retailing. As a result, shopping malls based on their configuration, can be further categorized as follows: Enclosed Mall: These are enclosed malls, with a climate- controlled walkway between two facing strips of stores. Most of the malls in the city are enclosed mall with department stores, super-market or a hyper-market chain, food-court and fine dining options as well as entertainment retailers. Open-air malls: Strip center: A strip center is a single or multi level row of stores or service outlets managed as a coherent retail entity, with on-site or basement parking. A strip mall usually designed on a strip of land is configured in a straight line, or has an "L" shape depending on the dimensions of the land parcel. One MG Road (0.18 million sqft) by G-Corp despite being an enclosed mall has incorporated design elements inherent to a Strip mall with retail stores facing the street. This mall has been designed as a combination of open-air / high-street format and an enclosed mall like format. Emerging Retail Format: Organized Wholesale Retail Town Center: A town center is defined as an open-air center with public space and street front retailing on at least two pedestrian streets. Town centers are essentially parts of integrated developments with residential, office and civic uses along with retail component thereby creating an ambience of dowtown. Proposed shopping mall by Karle Properties - Karle Town Center (1.4 million sqft) is expected to be a community mall designed as a Town Center having a combination of open-air / high-street and an enclosed mall like format. Before economic liberalization, wholesale markets in the city were restricted to the “petta” regions. Areas of Chikpet, Ballepet, Akkipet , Cubbonpet - continued to cater to the wholesale retail demands of the city ranging from grocery to stationery items to textiles. In 1997, with Government of India (GoI) permitting 100% FDI in Cash and Carry formats, the city witnessed entry of major cash and carry players in the organized retail sector and prominent retailers like Metro Cash and Carry and Decathlon set-up their stores in the city. Going forward, the wholesale market in Bangalore is expected to witness entry of many international players such as Best Price by Bharti Walmart, Carrefour and expansion of existing players including Metro Cash and Carry and Decathlon. Salarpuria Sattva in collaboration with Future Group is set to launch a World Market (1.0 million sqft) on Old Madras Road in PBD. BANGALORE: RETAIL MAKET REPORT 24
  26. 26. SHOPPING MALL: PRODUCT CATEGORY DISTRIBUTION 25
  27. 27. Malls in the city are largely anchored around an Apparel and Footwear brand and / or a Hyper-market chain. Entertainment and Food & Beverage (F&B) retailers are also among the predominant anchors in shopping malls. In community malls anchor tenants usually occupy 40 - 50% of the total mall space and for a regional mall it ranges between 50% and 55%. Department Stores or Apparel and Footwear brands are one of the prominent anchors in shopping malls. Other significant anchor tenants include multiplexes closely followed by hyper- market chains like Star Bazaar, Hypercity, Big Bazaar, Spar and restaurants. Restaurants / food-courts also attract sizeable consumers to malls. Figure: Product Category Distribution: Anchor Stores 5% Till recent past, entertainment in the retail malls was confined to Multiplexes; however, today it is growing to a status of an important anchor. Brigade Orion at Rajajinagar and Park Square in Whitefield have roped in various gaming retailers- the likes of Blu O, Amoeba and Time Zone apart from eminent multiplexes. Vanilla stores across the malls in the city are dominated by Apparel and Footwear retailers followed by Food and Beverage (F&B) tenants. Other categories like electronic goods, home furnishings books & stationery items are also among the noticeable retailers occupying vanilla stores. Figure: Product Category Distribution: Vanilla Stores 5% 4% 19% 16% Apparels & Footwear Food & Beverages Multiplex Luxury Malls 40% 16% Home & Life Style Hyper market / Super market Others 4% 20% 55% 9% 7% Fashion & Apparel Personal Care / Watches / Jewellery Food & Beverages Books / Stationery / Gifts Electronic & Whitegoods Others As per AT Kearney, the Indian luxury market is growing at 20% a year and is expected to grow to USD 14.7 billion by 2015 from USD 5.8 billion today. In addition, 100% FDI in single brand retail is expected to facilitate entry of international retailers in the city. Owing to a healthy economic growth, the city has witnessed an increase in population of High-Net Worth Individuals (HNI) and Super rich. The city accounts for the third largest population of HNIs after Mumbai and Delhi. Luxury retail in Bangalore is confined to high-street of Lavelle Road and five-star hotels. UB City at Lavelle Road and Leela Galleria at Leela Palace are amongst the key operational luxury malls in the city. UB City has become a preferred destination for luxury brands mainly due to availability of necessary infrastructure and brand visibility that it offers. Key luxury brands operational in the city include Burberry, Jimmy Choo, Louis Vuitton, Canali, BottegaVeneta, Tag Heuer, Paul Smith and Tumi. Upcoming malls in this category is Embassy Group’s shopping mall at Residency Road. Prevailing luxury mall rentals range between INR 350 and 420 per sqft per month for UB City and between INR 150 and 250 per sqft per month for Leela Galleria. BANGALORE: RETAIL MAKET REPORT 26
  28. 28. SHOPPING MALL: RENTALS 27
  29. 29. Shopping mall in SBD offer an advantage as compared to malls in CBD owing to high ATD, substantial footfalls, better mall infrastructure and lesser rentals. Shopping mall rentals mainly depend on the location of the mall and the size and location of the store in the mall. Total occupancy cost for a retail outlet includes both rent as well 18 Post 2009, shopping mall rentals across CBD witnessed no major change due to increased mall space supply in the SBD locations. Malls rentals in SBD locations witnessed marginal appreciation in rental values in the range of 10 - 12% during 2009 - 12.as the Common Area Maintenance (CAM) charges . CAM charges across malls in Bangalore range between INR 20 - 26 per sqft per month on Super built-up area. 19 Annual ATD on Useable Carpet Area (UCA) across SBD malls range from INR 8,000 to 16,000 higher than the ATD for CBD malls, which ranges from INR 5,000 to 9,000 . Higher ATD in SBD is attributed to growing catchment area and availability of better mall infrastructure as against CBD. Comparable rentals and higher ATD offer an advantage to shopping malls in SBD locations when compared to CBD locations. Of the SBD locations, Forum Mall at Koramangala charges a higher rent of INR 420 - 450 per sqft mainly due to higher foot falls and higher ATD. The Forum not only attracts the highest foot falls but also accounts for the highest ATD of nearly INR 16,000 per year per UCA20 Table: Prevailing Mall Rentals Rentals Amongst the PBD locations, mall rentals in Bannerghatta Road increased by 8 - 10%, but were insignificant in Whitefield and Mysore Road. Shopping mall rentals across CBD locations of Bangalore to witness nominal growth in the short term mostly due to increased mall space supply and better infrastructure in SBD locations. Rentals across SBD locations are expected to sustain this growth trend within the next three years, owing to minimal prevailing vacancy rates and moderate pre-commitments. High impending mall space supply in PBD locations likely to contain the rental values at current levels for the next 1 year. Table: Average Trading Density (INR/year/UCA) (INR/sqft/month) Anchor Tenants Multiplex Vanilla Tenants 21 Ground Floor First Floor Other Floors CBD SBD PBD 55 - 90 45 - 75 35 - 50 50 - 70 45 - 60 40 - 50 185 - 400 220 - 450 120 - 200 150 - 350 180 - 325 80 - 175 120 - 300 150 - 275 65 - 150 Based on Micro-market CBD 7,800 SBD 9,800 PBD 6,300 18Please refer annexure for the scope of work covered under Common Area Maintenance 19Source: Vestian Research 20Source: Vestian Research 21Rental Values indicated are on carpet area for a 1,000 sqft vanilla store with an efficiency of 65% BANGALORE: RETAIL MAKET REPORT 28
  30. 30. OUTLOOK By 2015, Bangalore is expected to witness an addition of nearly 5.60 million sqft; PBD locations account for nearly 70% of this upcoming supply. The attractive micro market for development of a shopping mall in short term is ORR - Sarjapur due to the lack of existing and under-construction mall space. Meanwhile Bangalore North and Old Madras Road have potential for development of malls in medium to long term. Owing to significant existing and impending mall space, Whitefield does not have potential for development of new malls in short to medium term. Shift in the developers’ interest towards Bangalore North has made way for many planned retail projects in this micro-market. Consequently, this is a potential choice for mall activity in the coming 3 - 5 years. Retail activity in Old Madras Road is expected to gain momentum in medium to long term, mainly due to increase in residential supply, improved connectivity and economic development towards Hoskote Industrial Area. As against the last decade wherein development of malls was still in a nascent stage, the city is currently witnessing a differentiation phase with the development of newer formats of malls and retail infrastructure. Previously malls in the city were primarily community malls. However, entry of national developers and availability of larger land parcels have led to the development of regional malls in the city. Malls in the city are largely anchored around an Apparel and Footwear brand, F&B, entertainment and / or a hyper-market chain. Till the recent past, entertainment in the retail malls was confined to multiplexes however; going forward other forms of entertainment are going to be an important part of the anchor. With significant luxury brands planning to foray in to the city’s market, demand for luxury malls is likely to remain strong. Despite increasing mall space in the city, key high-street locations of the city shall continue to attract retailers mainly due to better brand visibility, optimum catchment area reach and convenience of access. In light of 51% FDI allowance for multi—brand retail by Government of Karnataka - the demand for retail space in the city is expected to strengthen in the coming years. Prevailing low vacancy rates, high footfalls and strong economic outlook are likely to positively impact the rental values across both shopping malls and high street locations. 29
  31. 31. TERMS OF REFERENCE CLASSIFICATION of the city: To understand the characteristics of the retail spaces across Bangalore, the city has been sub-divided spatially in to three major zones: Micro-markets Central Business District (CBD) Secondary Business District (SBD) North East South East South West North West Peripheral Business District (PBD) Areas covered within the micro-markets M.G. Road, Brigade Road, Magrath Road, Richmond Road, Lavelle Road, Cunningham Road, Langford Town, Brunton Road and Residency Road SBD locations based on the geographic boundaries have been further categorized in to four quadrants: Indirangar, CMH Road, Old Madras Road (till K.R.Puram Bridge), Banaswadi, Bellary Road (till ORR) Koramangala, few locations of Bannerghatta Road and Hosur Road (till Silk Board Junction) Kanakpura Road (till ORR), Jayanagar, JP Nagar, Vijaynagar and few locations of Rajajinagar Sadashiv Nagar, New BEL Road, Sanjay Nagar, Malleswaram and few locations of Rajajinagar and Yeshwanthpur Peripheral locations of Whitefield, ORR - Sarjapur, Electronics City and Hosur Road, Bannerghatta Road, Kanakpura Road, Mysore Road, Old Madras Road, Tumkur Road and Bangalore North 31
  32. 32. TERMS OF REFERENCE Definitions High-Street Shopping Malls Areas covered within the micro-markets A high-street refers to the retail street in a city with street lined retail stores. A shopping mall is a group of retail establishments that is planned, developed, owned and managed as a single property with on-site and basement parking Tenant Category in Shopping Malls Anchor Tenant Vanilla Store Unit of Measurement Gross Leaseable Area (GLA) Useable Carpet Area (UCA) Common Area Useable Carpet Area (UCA) The major chain/s or department store/s in a shopping mall positioned to produce traffic for smaller stores in the facility Smaller format retail stores in a mall are call Retail spaces are measured on the following three bases: GLA is the total floor are designed for a tenant’s occupancy and exclusive use, including basements, mezzanines or upper floors measured from the centerline of joint partitions and from outside wall faces. It is generally expressed in square feet (sqft) and rents for shopping malls is payable on the GLA. Useable carpet area or the carpet area is the total area of the premises measured from internal walls Common Area include usable consumer horizontal and vertical circulation areas. In some cases a portion of landscaped / outdoor piazza would also constitute to common areas. Loading Factor is the ratio of Loss Factor and UCA. Loading factor across shopping malls in Bangalore for,  Anchor tenants varies between 20% and 30%  Vanilla stores vary between 50% and 60%.  High-street locations ranges between 15% and 25%. BANGALORE: RETAIL MAKET REPORT 32
  33. 33. TERMS OF REFERENCE Operating Costs Tenants follow the following rental models: Rent Maintenance Charges Utilities Insurance Car Parking Stamp Duty Registration Charges Lease Terms Lease Period Security Deposit Hours of Operation Rent Escalation  Fixed rental with annual escalation  Revenue Sharing Model which involves a fixed component (Minimum Guarantee) and a variable component which is based on a percentage earned on the retailer’s sale. Maintenance of the common areas namely upkeep of the corridors, Annual Maintenance Contracts (AMC) for all the equipment provided by the developer is under the purview of the developer or the landlord; however expenses towards the same are borne by the tenant and is payable on the GLA. For both high-street and malls, the tenant is accountable for the payment of electricity, water and telecommunications within their premises which is charged at actuals. Insurance for the building / mall is under the purview of the developer or the landlord. As per market practice, shopping malls across Bangalore offer minimum 1 car park for every 750 sqft leased; charges for which are included in the rent. Any additional car parks required by the tenant over and above this attracts an additional charge. Stamp Duty for the premises shall be borne by the tenant. Based on the tenure of the lease Stamp Duty is applicable as follows: 0 - 10 years : 1% on annualized Average rentals of total lease tenure and Security Deposit 10 - 20 years : 2% on annualized Average rentals of total lease tenure and Security Deposit Registration charge for the premises shall also be borne by the tenant. Based on the tenure of the lease registration charges are applicable as follows: 0 - 10 years : 0.5% on annualized Average rentals of total lease tenure and security deposit 10 - 20 years : 0.5% on annualized Average rentals of total lease tenure and security deposit Typically lease period is as follows  15 - 21 years for Anchor stores  6 - 9 years for Vanilla stores As a market practice, the landlord / developer charges an equivalent of 6 - 8 months rent as interest free security deposit. For both high-street and malls, maintenance charges are computed considering the hours of operations to be in the range of 10 - 12 hours As per the current practice, rental values for malls or high-streets are escalated by 5% every year or by 15% every three years 33
  34. 34. GLOSSARY IT Information Technology ITeS Information Technology enabled Services INR Indian Rupee BCC Bangalore City Corporation CITB City Improvement Trust Board BDA Bangalore Development Authority FDI Foreign Direct Investment BIAL Bangalore International Airport Limited GLA Gross Leasable Area ORR Outer Ring Road MBO Multi-Brand Outlet GDP Gross Domestic Product HNI High Net Worth Individual UCA Usable Carpet Area ATD Average Trading Density 34 CBD Central Business District SBD Secondary Business District PBD Peripheral Business District

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