New Delhi: Driven by aggressive expansion by organised retailers, over 6 million square feet of retail mall space was added across India in the first six months of this year, primarily in the metro cities, according to a report by research firm CB Richard Ellis India.

In 2010, a total of 5 million square feet of organized retail space was added, CB Richard Ellis India (CBRE) said, but did not provide data on the total available organized retail space in the country.

According to the report by the firm, the National Capital Region (NCR), Mumbai, Bangalore, Pune and Chennai witnessed most of the retail expansion activity.

A number of leading brands and national and global retailers began renewing their expansion plans across the country toward the latter part of 2010. This move gained further momentum in the first half of 2011, CBRE said.

"India is the fifth largest retail market in the world. Currently, expansion by both national and international retailers is concentrated in the prime locations of key cities, thus prompting an upward movement of rentals," CB
Richard Ellis South Asia Chairman and Managing Director Anshuman Magazine said.

Secondary locations will witness a larger supply in the next two years, thus leading to further expansion of the retail sector, he said.

"With the possibility of Cabinet passing a Bill allowing 51 per cent FDI in multi-brand retail, I believe that our economy will attract more international attention and investment in the future," he added.

The report said though there has been an increase in demand for retail space, there is still a lot more space available, as the supply pipeline is quite large, especially in leading cities.

"This would continue to exert some pressure on developers to offer rental discounts and maintain flexibility to avoid higher vacancy levels in the long term," the report said.

According to CBRE estimates, the overall rental values across malls have witnessed 4 to 16 per cent increase across key markets in the NCR during the first half of this year.

Even Mumbai saw an increase of 10 per cent to 20 per cent in rental values in both high street and mall retail spaces during the period under review, it said.

The first half of 2011 witnessed an upswing in transaction activity in Bangalore, aided by buoyant economic conditions and the positive market sentiment.

"The city is witnessing a change in its retail set-up, with a number of hypermarkets getting operational. The city already has more than 30 hypermarkets operational in leading malls across the city, while another 30-35 are in the pipeline over the next three to five years," it said.

Chennai also observed an increase in rental values during the review period, primarily across high street destinations.

"Rental values are expected to appreciate in the range of 10 per cent to 15 per cent across all the key high streets and occupancy levels are also likely to improve during the second half of 2011," the report added.

(Agencies)