Mall revenue recovery to be 80-85% of pre-pandemic level

20 Apr '21

2 min read

Pic: TK Kurikawa / Shutterstock.com

The revenue of shopping malls in India is expected to grow 45–55 per cent this fiscal, but would still be 15–20 per cent below the pre-pandemic levels because of continuing waivers for underperforming retail segments and the possibility of fresh waivers due to mobility curbs following the second wave of the pandemic, an analysis by CRISIL Ratings has said.

The new restrictions related to the second wave of COVID-19 will affect retail sales, but the debt-servicing ability of the malls rated is expected to be largely intact in the near term because of strong sponsors and healthy liquidity. The 14 malls analysed by CRISIL have leasable space of more than 10 million sq ft; are spread across 10 cities: Ahmedabad, Amritsar, Bangalore (2), Bareilly, Chandigarh, Chennai (3), Indore, Mumbai (2), Lucknow and Pune; and have a cumulative debt of ₹6,500 crore.

The recovery in retail sales, however, will not be uniform. Malls in Maharashtra, which account for 35–40 per cent of the revenue of the sample set, will be impacted the most because of the mini-lockdown currently imposed, CRISIL said. Other key geographies have announced less-stringent restrictions. How the affliction curves shape up in these areas would bear watching, it said.

Overall retail sales at malls declined 55 per cent last fiscal. Although closures in the first half had a significant impact, gradual recovery after reopening provided an offset in the second half. “Footfalls remained considerably lower than pre-pandemic levels, but average spend per footfall darted up more than 25 per cent,” a CRISIL statement remarked.

The ratings agency also warned of an increasing risk of cannibalisation of retail revenue by online platforms. “E-retail is expected to grow faster than traditional brick and mortar stores, driven by a pandemic-induced shift in consumer buying preferences. E-retail is expected to grow around 35 per cent between fiscals 2020 and 2022 as adoption accelerates,” it said.

Fibre2Fashion News Desk (SG)

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