The bullish outlook of retailers towards expansion in FY24 has led to an increase in mall rentals to the tune of 5-7% this year compared to last year, conversations with mall owners across cities such as Mumbai, Delhi and Kolkata reveal. The cinema chains, on the other hand, are seeking to renegotiate rentals down to the tune of 10-15% for new theatres in malls as footfalls remain sluggish, especially for Hindi film content, mall owners say.
“Box-office performance has been a challenge for multiplex operators especially in the Hindi segment, though south cinema is doing well,” says Mukesh Kumar, MD & CEO, Quest Properties India, who is also the chairman of the Shopping Centres Association of India, an apex body of mall owners.
“Retailers, on the other hand, remain buoyant on account of a positive outlook they have towards the market,” Kumar said.
While mall rents are hiked every three years to the tune of 15%, say experts, this year stands out because the retail market is actually facing a discretionary slowdown in categories such as apparels and fast-food. This is due to inflationary pressures and financial uncertainty, says Jaydeep Shetty, a Mumbai-based retail expert and consultant.
Yet, store additions show no signs of slowing down, with most retailers banking on a comeback in discretionary spending during the second half of the year, which also coincides with the festive period.
“FY23 saw rentals grow in double-digits because revenues kicked in for retailers quickly after the Covid-19 restrictions were completely lifted,” says Rajneesh Mahajan, CEO, Inorbit Malls India. “This year, we expect rentals to grow in high single digits, which is coming on a strong base, when compared with last year,” he said.
In a survey of the retail market last month, the Retailers Association of India, an apex body of retailers, indicated that while year-on-year retail growth in April was 6%, this trend could change as consumption patterns could improve over the next few months with the onset of the festive season.
Multiplexes, meanwhile, are looking for the next big film after the success of Shah Rukh Khan-starrer Pathaan in the early part of calendar year 2023.
While announcing its Q4 results last month, multiplex chain PVR Inox, the largest cinema chain in the country, said that it will be shutting down 50 screens over the next six months. It would also realign all upcoming handovers of new sites for fitouts till the business completely recovered.
“The 50 screens are loss-making or these are housed in malls that are at the end of their life cycle, and with little hope of any revival. The company has, therefore, taken an accelerated depreciation in its books and written off the value of these assets,” PVR Inox said.