Impact of COVID-19: Income of shopping center owners fell nearly 50% in FY21

The income of shopping center owners has fallen by around 50% in the last fiscal year as the retail sector has been hit hard since the outbreak of the COVID-19 pandemic in March of last year. according to real estate developers and consultants. Average monthly rents in shopping malls fell 4-5% in eight cities, although many malls saw rents corrected by up to 25%, they said.

Most mall owners, who typically rent space in their malls on a revenue-sharing model with retailers with a minimum warranty clause, granted full rental waivers during the April-June period. 2020 due to national lockdown to control COVID.

The mall’s developers have also offered huge discounts in the remaining nine months of the past fiscal year, resulting in a huge drop in their overall revenue.

“The effect of COVID on the retail industry has been well reported. The nearly six-month lockdown has taken its toll on the retail segment.

“The drop in revenue for the entire past fiscal year has been around 50% and with the second wave it will be the same again,” Pacific Group executive director Abhishek Bansal said when asked about the impact on fiscal year 21 and the outlook for this fiscal year.

When contacted, Harsh Bansal, the director of the Unity group which owns several shopping centers in the nation’s capital, said there had been a huge impact in the past fiscal year and total rental income was not than about 40 to 50% of the normal year.

He said, however, that rentals for the new lease have not declined at his mall, although the company is offering discounts for a limited period.

Due to the COVID-19 pandemic, average monthly rents in many shopping centers have fallen by as much as 25%, said Abhishek Bansal and called on authorities and banks to help retailers and shopping center owners during this crisis.

Shubhranshu Pani, MD (Retail Services), JLL India, said the impact of rentals on shopping malls has been multiple.

For shopping center owners, he said the impact of COVID during the period March 2020 to March 2021 was around 50%, mainly due to lost rent and operating costs.

Pani said the multiplex contributes 15% of overall rental income for shopping center owners and that has almost been wiped out.

Pankaj Renjhen, COO & Joint MD, Anarock Retail, said developers would certainly have seen their overall revenues decline last year, but that’s hard to quantify.

“Now, with the arrival of the second wave and the closure of shopping malls in most cities, there is no doubt that it will again wreak havoc and severely affect the sector,” he added.

Cushman & Wakefield said average shopping center rents in the eight main cities have fallen by around 4-5% after the pandemic.

Average rents in upper malls have seen marginal rent corrections, but good and medium malls have seen rent corrections of up to 7-10%.

“The income of shopping center owners has fallen by around 40-50% in the last fiscal year. Rental negotiations / discounts / waivers in the middle of wave two are expected to have an impact on their income again this year,” he said. said Cushman & Wakefield.

The incomes of shopping center owners are expected to increase, given the weak base in 2020, he added.

Harshvardhan Singh, director – Business Advisory and Transactions – Retail, Savills India, said rents have fallen by around 15-25% in many shopping centers.

“In contrast, revenues were slightly more affected,” he said.

Shopping center owners have not only been affected by the concessions given to tenants in terms of rent reduction, but also by significant reductions in ancillary income from other sources such as pop-up stores, parking and signage. Singh said.

Weak consumer confidence along with tight closures and restrictions following the pandemic have significantly slowed shopping mall businesses in India since March 2020, he noted.

Singh said malls are gradually getting back on their feet, with most showing an upward trend.

However, he said, the ongoing second wave of the pandemic has once again put the brakes on the retail sector due to the intensity and severity of the current health crisis.

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Peggy P. Gilmore