Healthy operating performance, comfortable balance sheets to keep credit profiles stable
Mall space in India is set to increase by 30-35 million square feet (msf), or a third of current stock, over the next 3-4 years, spurred by the strong recovery in retail sales last fiscal. The retail recovery is expected to sustain, as broad-based consumption across geographies as well as sectors fortifies demand resilience. In fact, revenue of mall owners for this fiscal is estimated at ~125% of the pre-pandemic level.
The area addition will be aided by continued investor interest in malls, as evident from investments in new assets. This, along with comfortable balance sheets, will keep credit risk profiles of mall owners stable despite the sizeable capital expenditure (capex) plans.
Says Anand Kulkarni, Director, CRISIL Ratings, "Malls are expected to attract investment of more than Rs 20,000 crore over the next 3-4 years. The reasons for the sizeable supply addition are twofold: one, resumption of work on new supply, which was stalled during the pandemic due to uncertainty regarding the timeline of recovery. And two, robust retail sales at malls and the consequent strong operating performance of mall owners in the current as well as last fiscal."
Says Saina Kathawala, Associate Director, CRISIL Ratings, "Mall owners are likely to report a second consecutive year of high performance this fiscal, with revenue growth of 7-9%, following the robust 60% growth last fiscal. This strong performance has helped malls sustain healthy occupancy of ~95%. The operating performance is likely to remain strong over the medium term due to the underlying broad-based consumption across multiple retail categories."