Bangalore Retail Market

Bangalore:Retail Market Report

BY SAYAN DASBY SAYAN DAS

BANGALORE RETAIL MARKET STATISTICS: 2013 AND BEYOND

7.65 million sqftof operational shopping mall spaceof which 7% is vacant

12%5% to

is the avg. annual growth rateof mall rentals since 2010

5.67 million sqftof under-construction mall space ofwhich 45% is pre-booked

9%5% to

is the avg. annual growth rateof high-street rentals since 2009

13.79 million sqftof planned mall space

16K3K to

is the Annual Avg. TradingDensity per Useable Carpet Areafor shopping malls

1

EXECUTIVE SUMMARY

In past years, Bangalore’s retail journey has been

booming with several international & national brands setting-up

their stores in the city. Favourable demographics, robust

economy, rising per capita income, easy availability of credit &

large scale retail developments have fueled the growth of

Bangalore’s retail market.

Bangalore today houses large format retail malls catering to the

luxury segment as well as value shoppers. The city is a prefered

retail destination in the country after Mumbai and Calcutta. As of 2012,

total operational mall space in the city is added to be 7.65 million

sq.ft and the vacancy is 7%.

Significant residential activity & availability of land fuelled the

development of shopping malls in SBD & PBD locations of the

city. In terms of GLA, PBD and SBD respectively account for 48%

and 42% of the total shopping mall space while CBD locations

occupies 10% of the total mall space in the city.

Bangalore in present houses neighbourhood, community and regional

malls. Mantri Mall at Malleshwaram, Phoenix Mall at

Whitefield & Orion Mall at Dr. Rajkumar Road are key

regional malls while The Forum at Koramangala & Meenakshi Mall

at Bannerghatta Road are prominent malls in the city.

Among the PBD locations, residential micro-market

of ORR - Sarjapur has an opportunity for development of shopping

malls. Whitefield on the other hand has substantial operational mall

space and accounts for large percentage of total operational space

Amongst PBD . Location of Mysore Rd, Bannerghatta Rd,

Tumkur Rd & Hosur Road are in balanced state with retail

activity in these locations complementing the residential activities.

Retail activities across Bangalore North and Old Madras Road

(OMR) are booming and have retail infrastructure development

potential in the upcoming years.

BANGALORE: RETAIL MAKET REPORT 2

Malls across the city are essentially anchored around a

department store & / or a hyper-market or super-market chain.

Few years ago, entertainment in the shopping malls was

limited to multiplexes however; entertainment is now growing to a

status of being an important anchor. Brigade Orion at Rajajinagar

and Park Square in Whitefield along with multiplexes have roped in

various gaming retailers.

Wholesale retails is one of the emerging formats in Bangalore.

Conducive Government regulation have led to the entry of many

such players in the city and several new brands are

progressively venturing into the city’s retail market. Future Group

with Salarpuria Sattva Group is set to launch first of its kind

wholesale market - World Market on Old Madras Road in the city.

Luxury retail has come as a new concept here at the

establishment of UB City at Vittal Mallya Rd. This

segment has witnessed slow but steady growth. However, the

presence of luxury retail is expected to be restricted to the CBD &

SBD locations.

Shopping mall formats in the city continue to develope over time. One

MG Road, in CBD is designed as an enclosed strip mall and lately

Karle Properties is planning to develop a Town Center, which is a

combination of open-air / high-street and an enclosed mall format.

Rental values in shopping malls in the city are expected to

witness a steady growth within 1 - 3 years, owing primarily to a

steady increase in the metropolitan population and relaxation of

FDI rules.

High-street locations will carry on to coexist with the malls in the

city despite infrastructure issues and increase in mall space.

Rental values across high-street locations are likely to witness

nominal growth in short term.

HISTORY OF RETAIL DEVELOPMENT IN BANGALORE

Before 1949Bangalore had two distinct

administrative bodies:Bangalore City

Municipality (BCM) &Bangalore City MilitaryStation Municipality(BCMSM)

1950 - 1970

Formation of BangaloreCity Corporation (BCC)

Retail developments in the city were mainly spread across two prominentclusters :

Akkipet, Ballepet, Chickpet, Cubbonpet, Avenue Road and other markets inpetta region catered to the retail needs of people in old Bangalore

Shivajinagar, MG Road, Commercial Street and Ulsoor were key retaildestinations serving the Cantonment area

Areas around Brigade Road gained prominence as key destinations forentertainment mainly due to presence of Opera House. Various theatres

by integration of BCM andBCMSM

1970 - 1990

Formation of Bangalore

Development Authority in 1976 led to

development of newresidential layouts namelyJayanagar, HSR Layoutand BTM Layout

namely Galaxy, Blue Moon, Rex and Plaza theatre commenced operationsduring this time.

BDA developed neighbourhood shopping centres (BDA complexes) with retailshops to cater to the daily needs of residents within the layout. Jayanagar BDAcomplex was the first BDA complex to commence operations in 1978, followedby Indiranagar and Koramangala BDA Complexes.

3

1990 - 2005

EconomicLiberalization in 1991In 1997, Government of

India (GoI) permitted

100% FDI in wholesalecash and carry retailformat

2006 - 2012Government of India

(GoI) allows 51% FDI in single brand retail in2006

Completion of Bangalore International Airport at

Devanahalli in 2008 led to opening up of landparcels for developmenttowards Bangalore North

2013& BeyondIn 2012, Government of

India (GoI) allows100% and 51% FDI insingle and multi-

brand retailrespectively

Economic Liberalization in 1991 led to entry of various international brands inthe city. Nike, Reebok, Adidas and KFC set-up their stores along high-street of

Brigade Road and Commercial Street.

Brigade Road started transforming in to a retail high street of the city; Mota RoyalArcade and 5th Avenue were among the first few modern format retail

shopping centres to commence operations during this period

In 2003, Metro Cash and Carry opened its stores at Yeshwantpur andKanakpura Road

Bangalore’s first mall - The Forum Mall at Koramanagala was operational in2004 .

Emergence of Indiranagar 100 Feet Road as a preferred high-street locationwithin SBD.

Increase in demand for mall space led to development of newer malls primarily inCBD and SBD locations. Garuda Mall and Sigma Mall were among theprominent malls to commence operations during 2006 - 07

UB City at Lavelle Road became Bangalore's first luxury shopping mall tostart operations in 2008. With completion of UB City, Lavelle Road graduated tobecome a luxury high-street location in the city

In 2009, Bangalore witnessed completion of Forum Value Mall at Whitefield, thecity's first value format mall

Development of regional malls - Phoenix Market City at Whitefield, MantriSquare at Malleshwaram and Brigade Orion at Dr. Rajkumar Road startedoperations between 2009 - 11

FDI in retail paves way for entry of international retailers and funds

City expected to witness entry of major brands like Carrefour, Walmart,IKEA


GROWTH OF RETAIL SECTOR IN BANGALORE

5

In the past few years, Bangalore’s retail journey has been growing with several international and national brands setting-up theirretail stores in the city. Favorable demographics, robust economy, rising per capita income, easy availability of credit and largescale retail developments have fueled the growth of Bangalore’s retail market.

Growth in the IT/ITeS industry has led to migration of the

educated middle-class to the city, consequently steering

residential developments as well. Bangalore’s residential

market witnessed an annual absorption of24,000

residential units during calendar year2012 and the

residential market is projected to grow at an annual growth

rate of 15%, making the city one of the most promising

residential markets in the country.

Growing Population

At 9.6 million, Bangalore urban district is the fifth most

populous urban district in India as of 2011. It registered a

decadal growth rate of 47% as compared to 2001. The city is

expected to continue its growth trajectory; and population

for the year 2021 is pegged at 14.0 million.

Robust Economy and Growing Per-capita Income:

Bangalore’s economic development is attributed to the

healthy growth of its IT/ITeS industry. Currently the sector

accounts for more than 1.0 million jobs in the city and will

continue to add over 100,000 jobs every year for next 3 - 5

years. Apart from IT/ITeS sector, the city is also witnessing

advancements in the field of biotechnology, aerospace and

aviation sectors.

Robust economy, growing population and high disposable

incomes have led to emergence of the city as a preferred

retail destination by both national and international brands

and over the years, retail spaces in the city have witnessed

an evolution in terms of design and quantum of spaces.

Bangalore today is the most sought after retail destination

in the country after Mumbai and Delhi mainly due to the

following reasons:

The growth in the IT/ITeS sector has been well supported

by the growth in the per-capita income of the city. As per1

McKinsey , by 2030 Bangalore is likely to have the highestper-capita GDP among all the Indian cities.

Shift from necessities to lifestyle products:

Retail growth in the city is linked to consumer needs andbehavior. Rising income levels and global exposure haveresulted in increased purchasing power. Additionally,consumer spends have shifted to lifestyle products andservices from daily necessities.

1McKinsey - McKinsey Global Institute - India's Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth, published in April 2010.


BANGALORE HIGH STREETS

Figure: Key High-Street locations of Bangalore

Byappanahalli

M G Road

1 M G Road

U B City

Bangalore Club

Existing Malls

Key high-street

locations

Metro StationMetro Rail Phase I - Reach 1 (Operational)Metro Rail Phase I - UG2 (Under-Construction)

Garuda Mall

7

The high-street locations of Bangalore have captured the retail trends and over the years have adapted to changing retail needsand consumer aspirations. Despite offering better brand visibility as against a shopping mall, key challenges faced by theselocations include traffic congestion, lack of parking space and unobstructed pedestrian walkways.

A high-street synonymous with a market or bazaar is a prime

retail hub in a city with street aligned retail stores. These are

predominant avenues for retail, trading and entertainment

activities. Early high-street locations of Brigade Road and

Commercial Street have been in existence since 1950s are

located in close proximity to the CBD.

With the spatial expansion of the city, the high-street locations

are no longer confined to the CBD area. During the last decade

prominent high street locations of Indiranagar 100 feet Road,

Jayanagar 11th Main Road, New BEL Road and Marathahalli

have emerged towards the Secondary Business Districts (SBD)

and Peripheral Business Districts (PBD).

The high-streets of the city exhibit distinct characteristics and

cater to a diverse target segment. Brigade Road and

Commercial Street continue to remain the most sought after

high-street locations in the city; Lavelle Road2attracts High

Networth Individuals (HNIs) and super rich of the city, offering

niche and exclusive products. Marathahalli over the years has

developed as a location for discount / outlet stores, whereas,

New BEL Road has emerged as an important high-street

location catering to residential areas of Sanjaynagar,

Sadashivnagar and Rajajinagar.

Of the SBD locations, Indiranagar 100 feet Road has evolved

from an upmarket plush residential location to one of the most

preferred retail destinations by both national and international

brands. High-street locations of Jayanagar and Malleshwaram

continue to interest retailers in the women’s apparel, gems and

jewelry segment.

Key areas witnessing increased retail activities in Bangalore

North include Kamanahalli Main Road and Sahakarnagar while

Marenahalli Road (JP Nagar - ORR stretch) towards south-

west of the city is gaining prominence as a retail high-street

mainly due to limited shopping mall space in the vicinity.

During 2009 - 12, rental values across high-street locations of

the city grew annually in the range of 5 - 9%mainly due to limited

upcoming supply and lower vacancy rates.

2Lavelle Road includes areas of Lavelle Road and Vittal Mallya Road

Bangalore’s high-street locations continue to attract national andinternational retail brands regardless of increased mall space inthe city due to higher brand visibility and considerable footfalls.However, traffic congestion, lack of unobstructed pedestrianwalkways and limited parking facilities are some of the basicconcerns that require improvement.

When profiling of tenants3in select high-street locations of the

city- a key observation was high-street locations are preferred

mainly by Apparel and Footwear Tenants followed by Food and

Beverages(F&B), and Electronic Goods, reason being

consumer buying trends and real estate cost.

Characteristics of four prominent high-street locations in the city -

two established high-streets and two having evolved in the last of

couple of years have been addressed in the study.

Figure: Product Category Distribution: High-Streets

7%

3%

9%

4%54%

7%

16%

Apparel & Footwear Food & Beverages

Electronic & White Goods Books / Stationery / Gifts

Others Personal Care / Watches / Jewellery

Automobiles

3Profiling of tenants is based on the number of stores and area of the stores has not been considered for the same.


BRIGADE ROAD

Figure: High-street Stacking: Brigade Road

Brigade Road

Apparel & Footwear Food & Beverages Books / Stationery / Gifts

Electronic & White Goods Others Personal Care / Watches / Jewellery

Note: High-street stacking map indicated above represents the brand layout as of December 2012 and is subject to change with time.Map not to the scale.

9

Brigade Road forms the stretch between Cauvery Store on M.G.Road and Opera House abutting Residency Road.

One of the most prominent high-street locations of Bangalore,Brigade Road has been in existence since the British era.

During 1970 - 80s, this high-street gained prominence as anentertainment hub of the city with existence of theatres namelyOpera House and Rex.

This high-street also boasts of first few shopping complexes in thecity; Mota Royal Arcade and Fifth Avenue are operational sinceearly 1990s.

Presence of shopping complexes strengthened Brigade Road as ahigh-street location and over the years this location has emergedas the most preferred location for any new brands venturing intocity. The high-street houses flagship stores of various retail brandsand is dominated largely by Apparel and Footwear brands.

This high-street in coming years will continue to attract retailersowing to improved connectivity with the completion of Metro RailPhase I. This is certain to boost footfalls across this location. Due tolimited availability of new supply and low vacancy rates, rentalvalues across this high-street location are expected to increasenominally in short to medium term.

Figure: Product Category Distribution: Brigade Road

6%

9%

7% 53%

7%

18%




Brigade Road

Operational Since

Driving Factor

Shop Size (sqft)

Existing Shopping Malls in proximity

Advantages

Concerns

Rental Values4(INR/sqft/month) Ground Floor

Average Annual Rental Appreciation 5

6

1980s

Location; proximity to MG Road; one of the early high-street locations

1,000 - 10,000

Garuda Mall (0.5 km), 1 MG Road (2 km)

Prime location, easily accessible, connectivity via Metro Rail

Limited parking space, one - way traffic allowed, no publictransport along the high-street

350 - 450

9%

Capital Values (INR/sqft) 30,000 - 40,000

4Rental Values indicated are on carpet area for a 1,000 sqft store on Ground Floor with an efficiency of 80%5Average annual rental appreciation figures are considered for the period between 2009 - 2012

6In the event of non-availability of sale transactions Capital Values have been derived considering average annual rent and yield rate of 11%


COMMERCIAL STREET

Figure: High-street Stacking: Commercial Street

SubanjaliSilks

RelianceTrends

Commercial Street

Levis

Metro

Ice creams

Catwalk

Davanam


Electronic & White Goods Others

Reid & TaylorBooks / Stationery / Gifts

ManyavarPersonal Care / Watches / Jewellery


11

Commercial Street emerged as a prominent retail streetserving the then Cantonment area mainly because of itsproximity to Shivaji Nagar. Earlier, this high-street wasessentially a traditional market characterized by small formatretail stores.

Commercial Street now accommodates contemporary brandsand modern format retail stores while simultaneously retainingits character and the traditional bazaar feel. This high-streetendures sizeable retail stores mainly targeting women’sapparel and accessories segment.

There are no operational or planned malls in this high-street;existing department stores along this high-street includeWestside and Max.

Key challenges faced by this high-street is lack of availability ofparking slots leading to congestion during peak shopping hoursand weekends.

Rental values across this high-street location are likely tocontinue to the existing growth trend mainly due to lack ofnewer retail spaces and lower vacancy rates.

Figure: Product Category Distribution: Commercial Street

6%5%

6%

2%

7%

74%




Commercial Street

Operational Since

Driving Factor

Shop Size (sqft)


Advantages

Concerns

Rental Values7(INR/sqft/month)

Average Annual Rental Appreciation

9Capital Values (INR/sqft)

1950s

Proximity to established markets - Shivajinagar and Russel Market

500 - 30,000

Garuda Mall (2.5 km), 1 MG Road (2.0

km)

Prime location, easily accessibleSmaller format retail stores, limited parking space, congestedduring peak hours and no entertainment options

Ground Floor 300 - 325

8 9%

26,000 - 28,000




LAVELLE ROAD AND VITTAL MALLYA ROAD

Figure: High-street Stacking: Lavelle Road and Vittal Mallya Road

RewardDolphin Kidswear

Scent

Cinebell

s

Le CreusetGalleria Time & Space

I art

Harley Davidson Showroom

Kaya Skin Clinic

Vittal Mallya Road

Chemistry

Crisp

Oryza Spa

Hakims Aalim

Java City

Cloud Bar

The Biere Club

Cinnamon

Limelight

La CristaalSunny’s

Ruosh, Bounce

Walton Road

UB City

N S Jewellers

Café Coffee Day,Forest Essential

Biguine Paris Saloon & Spa

Ferns N Petal

Porsche Showroom

Honda ShowroomApparel & Footwear Food & Beverages Maruti Suzuki Showroom



Automobiles


13

Lavelle Road high-street encompasses areas of Vittal MallyaRoad, Lavelle Road and Walton Road.

Once an upmarket, plush residential area, Lavelle Roadcurrently has established itself as a luxury high-street ofBangalore.

In early 2000s, this high-street had a few exclusive restaurantsand lounges. Completion of UB City in 2008 and proximity toaffluent neighbourhood triggered the development of luxuryretail spaces along this high-street location.

An upmarket retail high-street, it is marked by the presence ofsignature stores of various luxury apparel brands and luxuryspas & salons. Additionally it is also witnessing the opening upof luxury automobile showrooms namely BMW Cars, Porscheand Harley Davidson.

Key under-construction retail buildings in this high-streetinclude Bagmane Ventures (0.02 million sqft).

Lavelle Road will continue to remain a luxury destination of thecity with various luxury brands eyeing to enter Bangalore.Rentals across this high-street are likely to retain the past growthtrend in short term.

Figure: Product Category Distribution: Lavelle Road andVittal Mallya Road

9%

9%

33%3%

18%

3% 25%




Automobiles

Lavelle Road and Vittal Mallya Road

Operational Since

Driving Factor

Shop Size (sqft)


Advantages

Concerns

10

2000s

Development of UB City and proximity to affluent locality

2,000 - 12,000

UB City

Prime Location and an upmarket neighbourhood, pedestrian friendly

Non - availability of public transportation

Rental Values (INR/sqft/month) Ground Floor 200 - 265

11Average Annual Rental Appreciation 6%

Capital Values (INR/sqft) 12 17,500 - 23,000




INDIRANAGAR 100 FEET ROAD

Figure: High-street Stacking: Indiranagar 100 Feet Road

Indiranagar 100 Feet Road

Apparel & Footwear Personal Care / Watches / Jewellery Food & Beverages

Electronic & White Goods Others Books / Stationery / Gifts


15

Indiranagar 100 feet Road constitutes the stretch between

Domlur Junction (Stanley Boutique) and the Old Madras Road

Junction.

During its inception, this area was conceptualized as a

residential area. Post amendment in the zoning regulations

that facilitated development of commercial / retail properties,

this area started witnessing an increase in retail activity

primarily opening of restaurants, cafes and lounges.

Over the years, the high-street has witnessed penetration of

various brands in Apparel and Footwear, Electronic Goods

segment apart from the F&B segment.

As compared to other high-streets of Bangalore, Indiranagar

100 feet Road has a better planned layout, well laid pedestrian

walkways as well as free parking facility.

Areas around 12th Main command higher rents as opposed to

areas around Domlur flyover or near CMH Road. Additionally,

completion of Metro Rail Phase I in this region has improved

connectivity between CMH Road to Domlur Junction.

However, it has adversely impacted the stores between Old

Madras Road and CMH Road by reducing their visibility.

In the coming year rental values across this high-street are

likely to continue the past growth trend.

Figure: Product Category Distribution: Indiranagar 100 feet Road

11%

7%

37%

10%

9%

26%




Indiranagar 100 Feet Road

Operational Since

Driving Factor

Shop Size (sqft)


Advantages

Concerns

13

1990s

Proximity to an affluent residential catchment

1,500 - 12,000

Gopalan Signature Mall (3 km)

Easily Accessible, connectivity via metro, free car-parking andaffluent catchment

Traffic Congestion during peak hours; limited availability of car parks

Rental Values (INR/sqft/month) Ground Floor 175 - 220

Average Annual Rental Appreciation14 5%

Capital Values (INR/sqft)15 15,000 - 19,500




BANGALORE: SHOPPING MALL STATISTICS

Table: Shopping Mall Space Inventory (GLA in million sqft)

*Micro-market

Total Mall Space

CBD

SBD

North - East

South - East

South - West

North - West

PBD

Whitefield

ORR -

Sarjapur

Bannerghatta RoadKanakpura Road

Mysore Road

Tumkur

Road

Bangalore NorthHosur Road

Old Madras Road

Operational Area

Stock Vacancy

7.65 0.50

0.78 0.07

3.19 0.14

0.41 0.06

0.69 0.03

0.40 0.03

1.69 0.02

3.68 0.29

2.53 0.24

0.31 -

0.38 -

- -

0.34 -

- -

0.12 0.05

- -

- -

Under-construction AreaPlanned Mall

SpaceStock Vacancy

5.67 3.06 13.79

0.31 0.31 -

1.46 0.79 1.82

0.32 0.20 0.80

0.42 0.02 -

0.72 0.57 0.62

- - 0.40

3.90 1.96 11.97

0.87 0.30 1.58

- - 2.50

- - 0.80

0.45 0.28 2.27

- - 0.45

0.25 0.15 0.30

0.80 0.60 2.45

1.35 0.45 0.80

0.18 0.18 0.82

Figure: Shopping Mall Space Statistics

14 Vestian Estimate

12

10

87.65 13.79

6

4 7.155.67

2 2.61

0Operational Under-Construction PlannedMall Space Mall Space Mall Space

Stock Occupied

*The city has been categorized into three major micro-markets - CBD, SBD and PBD. Please refer Terms of Reference for spatial classification of the city.

17

As of 2012, operational shopping mall space in the city is 7.65 million sqft; projected to double by 2016.

Emergence of Bangalore as a preferred retail destination led toentry of several national and regional developers. Keydevelopers including Phoenix Mills Limited, Brigade Groupand Mantri Group continue to expand their retail portfolio in thecity. The city today has more than 20 operational shoppingmalls accounting for 7.6516million sqft.

Non-availability of large land parcels in CBD locations andsignificant residential activity in PBD locations has led toincreased development of shopping malls along PBDlocations. In terms of Gross Leasable Area (GLA)17, PBD and

SBD account for 48% and 42% respectively of the total

shopping mall space and CBD locations contribute to 10% of

total mall space in the city.

Secondary Business District (SBD) locations over the past few

years have witnessed increased supply of large land parcels

for redevelopment paving the way for development of

shopping malls. Retail activity in this micro-market is expected

to continue the growth trajectory mainly due to growing

catchment area, limited mall space in CBD locations,

availability of large land parcels for development and

enhanced connectivity via Metro Rail phase I. Key malls that

commenced operations in last one year in SBD locations

include Brigade Orion (0.75 million sqft) at Dr. Rajkumar Road

and Mantri Square (0.93 million sqft) at Malleshwaram.

Amongst the PBD locations, established residential location of

ORR - Sarjapur provides opportunity for development of

shopping malls in short term, while Whitefield on the other

hand has witnessed substantial penetration of retail activity.

Locations of Hosur Road, Bannerghatta Road, Kanakpura

Road, Mysore Road andTumkur Road support retail

infrastructure complementing the residential activities. Retail

activity in Bangalore North and Old Madras Road (OMR) is

burgeoning and these micro-markets have high potential for

development of shopping malls in medium to long term.

Whitefield accounts for highest mall space; it constitutes nearly

69% of total mall space in PBD locations. Whitefield over the

years has emerged as a self-sustaining location with

commercial, residential and retail developments. Key

operational malls in this location include Inorbit Mall (0.34

million sqft), Phoenix Market City (0.97 million sqft) and Park

Square Mall (0.45 million sqft). Owing to significant existing

and impending mall space, Whitefield exhibits lesser potential

for development of new malls in short to medium term.

Although ORR-Sarjapur stretch is one of the most promising

residential locations of Bangalore, the location is currently

dependent on SBD locations for its retail needs. Soul Space

Spirit(0.3 million sqft) is the only operational mall in this

location. With no malls under construction, this location is

highly suitable for development of shopping malls in short

term.

Kanakpura Road currently lacks presence of shopping malls,

but has substantial under-construction and planned mall

space. Key shopping malls in advanced stage of planning

include Mantri Arena (0.82 million sqft), and Puravanakara

Mall (0.45 million sqft).

Lack of availability of land for development, restricted land-

use zoning and proximity to SBD locations of Koramangala

and Jayanagar are key reasons that have restricted the

development of malls in Bannerghatta Road. Currently the

location has one operational mall Royal Meenakshi Mall (0.34

million sqft). This location has limited potential for

development of malls mainly due to significant mall supply in

SBD locations.

Mysore Road currently accounts for nearly 0.5 million sqft of

operational mall space. The malls here mainly cater to daily

requirements, lacking entertainment and fine-dining options.

Limited residential activity in this location has restricted

development of malls in this micro-market and has limited

upcoming and planned mall space.

Growth in residential activity over the past few years has led to

increased retail demand along Tumkur Road and this location

is a potential destination for mall activity. Currently, the

location does not have any operational mall, but houses Metro

Cash and Carry Outlet (Cash and Carry format). Vaishnavi

Sapphire (0.25 million sqft) is one of the key malls likely to be

operational by2013 end and BIG Shopping Center is

expected to open their flagship store BIG (0.42 million sqft) in

this location.

Limited residential activities along Hosur Road has restricted

the development of malls in this region. Presently, there are no

operational malls, however, with a few large-scale residential

projects coming up and with the proposed Metro Rail phase II-

this location is set to witness increased retail activity. Neo Mall

(1.35 million sqft) at Patel Neo Town is among the key

upcoming malls in this location.

Old Madras Road, of-late has witnessed increased residential

activity with major Class A developers launching their

residential projects. Currently, not many retail projects are

planned in this micro-market however; retail activity across

this micro-market is anticipated to gain momentum in the

medium to long term. Salapuria Sattva Group is set to launch

the World Market (1.0 million sqft) in this location.

Despite commercial activity in Bangalore North being in

nascent stage, this region has witnessed increased residential

supply. Shift in the developers’ interest towards this location

has made way for many planned retail projects. Key

developers including Brigade Group, MFAR Holdings,

Century Group and Ozone Group have planned shopping

malls in Bangalore North.

16Indicates Gross Leasble Area (GLA); unless and otherwise mentioned in the report mall size is indicated in terms of GLA17GLA is the total floor area designed for a tenant’s occupancy and exclusive use, including basements, mezzanines, or upper floors measured from thecenter-line of joint partitions and from outside wall faces. It is the space, including sales area and integral stock areas for which tenants pay rent.


BANGALORE: SHOPPING MALLS

Malls in CBD

Operational Under Construction Planned

1 G Corp 1 MG Road 6 Suraj Cambridge Mall

2 EVA Mall 7 Embassy Galaxy Mall

3 Garuda Mall

4 The Collection

5 Sigma Mall

Malls in SBD


8 Salarpuria Oasis Mall 17 Vega Mall 21 Sobha Grand Mall

9 The Forum 18 City View 22 Karle Mall

10 Swagath Garuda 19 Orion Mall - 2 23 Nitesh Mall

11 Gopalan Innovation Mall 20 World GT Mall

12 Mantri Junction

13 Mantri Square

14 Orion Mall

15 Gopalan Signature Mall

16 Leela Galleria

Malls in PBD


24 Soul Space Arena 35 Grand Mall & Towers 44 Gopalan Destination Mall

25 Phoenix Market City 36 Virtuous Xander Mall 45 Prestige Technostar

26 Inorbit Mall 37 Forum Shantiniketan Mall 46 MBD Zephyr

27 Park Square 38 Salarpuria World Market 47 Mantri Mall, Agara

28 The Forum Value Mall 39 Neo Mall 48 Raheja INXS Mall

29 Cosmos Mall 40 Gardens Galleria 49 Perk In Mall

30 Soul Space Spirit 41 Vaishnavi Sapphire 50 Prestige Falcon City

31 Royal Meenakshi Mall 42 MSR Regallia Elements 51 Mantri Mall, Kanakpura

32 Gopalan Arcade Mall 43 RMZ Galleria 52 Puravankara Mall

33 Gopalan Legacy Mall 53 Lotus Mall

34 Esteem Mall 54 Karle Town Center

55 Monarch Celestial

56 Century Istana High Street

19

Bangalore: Shopping Mall Snapshot

NH 7: To Hyderabad

56

Bangalore International Airport

55

Yelahanka

43

NH 4: To Mumbai

BIECHMT

Township

HesaraghattaCross

22

41 RMVExtensionPeenya Industrial Area 14

18Malleshwaram

34

Hebbal 42

54

NH 4: To Chennai

Nagawara

38Palace

13

Rajaji Nagar

20

GroundsBanaswadi

19Frazer TownByppanahalli

5 1MG Road

6 23

Krishnarajapuram

36 25

37

15 2745

44 ITPB46 26

21Vijayanagar

33

7 Indiranagar

Bangalore City 4 24C.V.RamanRailway Station Richmond Nagar

Town 3 2

8 16

Brookefield EPIP ZONEWHITEFIELD

2935 28

MarathahalliVarthur

Mysore Road

5332 Banashankari

Kengeri

SH 17:To Mysore

12

Puttenahalli

40

51

52

Jayanagar Koramangala

9

10

J.P. Nagar

1117 BTM Layout

50

31

30

47 Bellandur

48 Sarjapur Road

H

SR Layout

Begur

49Thalagattapura

Gottigere

NH 209: To Coimbatore

ELECTRONIC CITYPHASE I & II

39Bommasandra

NH 7: To Salem

Outer Ring Road Metro Rail Under Construction Key Residential Areas

NICE Ring Road Proposed Peripheral Ring Road

Metro Rail Operational Elevated Express Highway


SHOPPING MALL: CLASSIFICATION

21

Shopping malls in Bangalore can be predominantly categorized as neighbourhood, community and regional malls based on theanchor tenant, GLA and size of the trade area it serves.

International Council of Shopping Centers (ICSC) defines a

shopping mall as a group of retail establishments that is

planned, developed, owned and managed as a single property

with on-site and basement parking. Shopping mall’s size and

orientation are generally determined by the market

characteristics of the trade area served by the mall.

Shopping malls can be classified based on its tenancy mix and

size of the trade area it serves, not solely on the GLA of the

mall. Adapting from the definition as suggested by Urban Land

Institute(ULI) and ICSC, shopping malls in the city can

essentially be categorized as:

Neighbourhood Mall: Neighbourhood mall focuses on

convenience goods that meet the daily needs of an immediate

neighbourhood. Usually anchored by a super-market,

neighbourhood malls tend to serve a trade area within 2 - 3 km

radius and GLA for these malls range between 100,000 -

300,000 sqft of GLA.

Gopalan Arcade Mall (0.16 million sqft) and Gopalan Legacy

Mall (0.18 million sqft)are prominent neighbourhood malls in

the city. Elements Mall with Auchan hyper-market as one of its

anchor tenant and Vaishnavi Sapphire Mall with More super-

market as its anchor tenant are among the key upcoming

neighbourhood malls.

Community Mall: Community mall while providing daily

necessities also offer a wider range of merchandise, home

furnishings and entertainment options than the neighbourhood

mall.

Forum Mall (0.36 million sqft) at Koramangala, Royal

Meenakshi Mall at Bannerghatta Road (0.38 million sqft) are

among the operational community malls in the city.

Forthcoming Vega City Mall (0.42 million sqft) on Bannerghatta

Road is likely to evolve as a community mall.

Regional Mall: A regional mall offers a wider range in terms of

retail category, entertainment and food. This kind of a retail

development depending on its tenancy mix has a potential to

cater to the trade area ranging from 5 - 15 km.

Brigade Orion at Dr. Rajkumar Road (0.75 million sqft), Mantri

Square at Malleshwaram(0.933 million sqft) and Phoenix Market

City (0.97 million sqft) at Whitefield are categorized as regional

malls. Planned mall by Nitesh Estates at Indiranagar (0.8 million

sqft) and Mantri Mall (1.20 million sqft) at Agara Junction are

likely to be positioned as regional malls by virtue of its size

thereby catering to a larger catchment.

Specialty Mall: A specialty mall employs a unifying theme that is

carried out by the retail stores in their merchandize. These malls

may rely on discretionary income expenditures and provide one-

stop shopping experience for a specific product type or price

segment. These malls could be anchored by an upmarket /

premium Multi-Brand Outlet (MBO) format while fine dinning and

leisure also play a key anchor role.

The Collection - UB City at Vittal Mallya Road can be categorized

as a Specialty mall designed as a Luxury Mall. Upcoming malls

with alike theme in the city include Galaxy (0.19 million sqft) by

Embassy Group at Residency Road and City View by Westcourt

Real Estate (0.06 million sqft) on Bellary Road.

However, specialty malls focusing exclusively on sale of home

and furnishing products, cars and auto-accessories, gold or

electronic and white goods are currently un-explored in the city.

Table below compares the broad indicators to define the shopping

malls.

Table: Basic characteristics of Shopping Malls

Type of Mall

Neighbourhood Mall

Community Mall

Regional Mall

Anchor Tenants

Super-market /Hyper-market chain

Department Store /Hyper-market / Multiplex

1 or 2 Department Store /Multiplex / Entertainment Retailers

GLA (sqft) Trade Area Radius

100,000 - 300,000 2 - 3 km

200,000 - 500,000 3 - 5 km

600,000 - 10,00,000 5 - 15 km


SHOPPING MALL: CLASSIFICATION

2

Until the last decade, development of malls was at a nascent stage. However, with the progress of the city’s retail infrastructuretowards a differential phase, Bangalore is expected to see entry of new mall formats including a Strip Mall and a Town Center.

Over the years, shopping malls in the city have continuallyinvented a variety of additional real estate products toaccommodate advancing trends in retailing. As a result,shopping malls based on their configuration, can be furthercategorized as follows:

Enclosed Mall: These are enclosed malls, with a climate-controlled walkway between two facing strips of stores.

Most of the malls in the city are enclosed mall with departmentstores, super-market or a hyper-market chain, food-court andfine dining options as well as entertainment retailers.

Open-air malls:

Strip center: A strip center is a single or multi level row ofstores or service outlets managed as a coherent retail entity,with on-site or basement parking. A strip mall usually designedon a strip of land is configured in a straight line, or has an "L"shape depending on the dimensions of the land parcel.

One MG Road (0.18 million sqft) by G-Corp despite being anenclosed mall has incorporated design elements inherent to aStrip mall with retail stores facing the street. This mall has beendesigned as a combination of open-air / high-street format andan enclosed mall like format.

Emerging Retail Format: Organized Wholesale Retail

Town Center: A town center is defined as an open-air centerwith public space and street front retailing on at least twopedestrian streets. Town centers are essentially parts ofintegrated developments with residential, office and civic usesalong with retail component thereby creating an ambience ofdowtown.

Proposed shopping mall by Karle Properties - Karle TownCenter (1.4 million sqft) is expected to be a community malldesigned as a Town Center having a combination of open-air /high-street and an enclosed mall like format.

Before economic liberalization, wholesale markets in the city were restricted to the “petta” regions. Areas ofChikpet, Ballepet, Akkipet , Cubbonpet - continued to cater to the wholesale retail demands of the city rangingfrom grocery to stationery items to textiles.

In 1997, with Government of India (GoI) permitting 100% FDI in Cash and Carry formats, the city witnessed entryof major cash and carry players in the organized retail sector and prominent retailers like Metro Cash and Carryand Decathlon set-up their stores in the city.

Going forward, the wholesale market in Bangalore is expected to witness entry of many international playerssuch as Best Price by Bharti Walmart, Carrefour and expansion of existing players including Metro Cash andCarry and Decathlon. Salarpuria Sattva in collaboration with Future Group is set to launch a World Market (1.0million sqft) on Old Madras Road in PBD.


SHOPPING MALL: PRODUCT CATEGORY DISTRIBUTION

25

Malls in the city are largely anchored around an Apparel and Footwear brand and / or a Hyper-market chain. Entertainment andFood & Beverage (F&B) retailers are also among the predominant anchors in shopping malls.

In community malls anchor tenants usually occupy 40 - 50% ofthe total mall space and for a regional mall it ranges between50% and 55%.

Department Stores or Apparel and Footwear brands are one ofthe prominent anchors in shopping malls. Other significantanchor tenants include multiplexes closely followed by hyper-market chains like Star Bazaar, Hypercity, Big Bazaar, Sparand restaurants. Restaurants / food-courts also attract sizeableconsumers to malls.

Figure: Product Category Distribution: Anchor Stores

5%

Till recent past, entertainment in the retail malls was confined toMultiplexes; however, today it is growing to a status of animportant anchor. Brigade Orion at Rajajinagar and ParkSquare in Whitefield have roped in various gaming retailers-the likes of Blu O, Amoeba and Time Zone apart from eminentmultiplexes.

Vanilla stores across the malls in the city are dominated byApparel and Footwear retailers followed by Food andBeverage (F&B) tenants. Other categories like electronicgoods, home furnishings books & stationery items are alsoamong the noticeable retailers occupying vanilla stores.

Figure: Product Category Distribution: Vanilla Stores

5%4%

19%

16%

Apparels & Footwear

Food & Beverages

Multiplex

Luxury Malls

40%

16%

Home & Life Style

Hyper market / Super market

Others

4%

20%

55%

9%

7%

Fashion & Apparel Personal Care / Watches / Jewellery

Food & Beverages Books / Stationery / Gifts

Electronic & Whitegoods Others

As per AT Kearney, the Indian luxury market is growing at 20% a year and is expected to grow to USD 14.7 billion by2015 from USD 5.8 billion today. In addition, 100% FDI in single brand retail is expected to facilitate entry ofinternational retailers in the city.

Owing to a healthy economic growth, the city has witnessed an increase in population of High-Net WorthIndividuals (HNI) and Super rich. The city accounts for the third largest population of HNIs after Mumbai and Delhi.

Luxury retail in Bangalore is confined to high-street of Lavelle Road and five-star hotels. UB City at Lavelle Roadand Leela Galleria at Leela Palace are amongst the key operational luxury malls in the city. UB City has become apreferred destination for luxury brands mainly due to availability of necessary infrastructure and brand visibility thatit offers. Key luxury brands operational in the city include Burberry, Jimmy Choo, Louis Vuitton, Canali,BottegaVeneta, Tag Heuer, Paul Smith and Tumi.

Upcoming malls in this category is Embassy Group’s shopping mall at Residency Road.

Prevailing luxury mall rentals range between INR 350 and 420 per sqft per month for UB City and between INR 150and 250 per sqft per month for Leela Galleria.


SHOPPING MALL: RENTALS

27

Shopping mall in SBD offer an advantage as compared to malls in CBD owing to high ATD, substantial footfalls, better mall infrastructure and lesser rentals.

Shopping mall rentals mainly depend on the location of the mall

and the size and location of the store in the mall.

Total occupancy cost for a retail outlet includes both rent as well18

Post 2009, shopping mall rentals across CBD witnessed no

major change due to increased mall space supply in the SBD

locations. Malls rentals in SBD locations witnessed marginal

appreciation in rental values in the range of 10 - 12% during

2009 - 12.as the Common Area Maintenance (CAM) charges . CAMcharges across malls in Bangalore range between INR 20 - 26

per sqft per month on Super built-up area.

19Annual ATD on Useable Carpet Area (UCA) across SBD mallsrange from INR 8,000 to 16,000 higher than the ATD for CBDmalls, which ranges from INR 5,000 to 9,000 . Higher ATD inSBD is attributed to growing catchment area and availability ofbetter mall infrastructure as against CBD. Comparable rentalsand higher ATD offer an advantage to shopping malls in SBDlocations when compared to CBD locations.

Of the SBD locations, Forum Mall at Koramangala charges a

higher rent of INR 420 - 450 per sqft mainly due to higher foot

falls and higher ATD. The Forum not only attracts the highest

foot falls but also accounts for the highest ATD of nearly INR

16,000 per year per UCA20

Table: Prevailing Mall Rentals

Rentals

Amongst the PBD locations, mall rentals in Bannerghatta Roadincreased by 8 - 10%, but were insignificant in Whitefield andMysore Road.

Shopping mall rentals across CBD locations of Bangalore to

witness nominal growth in the short term mostly due to

increased mall space supply and better infrastructure in SBD

locations.

Rentals across SBD locations are expected to sustain this

growth trend within the next three years, owing to minimal

prevailing vacancy rates and moderate pre-commitments.

High impending mall space supply in PBD locations likely to

contain the rental values at current levels for the next 1 year.

Table: Average Trading Density (INR/year/UCA)

(INR/sqft/month)

Anchor Tenants

Multiplex

Vanilla Tenants 21

Ground Floor

First Floor

Other Floors

CBD SBD PBD

55 - 90 45 - 75 35 - 50

50 - 70 45 - 60 40 - 50

185 - 400 220 - 450 120 - 200

150 - 350 180 - 325 80 - 175

120 - 300 150 - 275 65 - 150

Based on Micro-market

CBD 7,800

SBD 9,800

PBD 6,300

18Please refer annexure for the scope of work covered under Common Area Maintenance19Source: Vestian Research

20Source: Vestian Research21Rental Values indicated are on carpet area for a 1,000 sqft vanilla store with an efficiency of 65%


OUTLOOK

By 2015, Bangalore is expected to witness an addition of nearly

5.60 million sqft; PBD locations account for nearly 70% of this

upcoming supply.

The attractive micro market for development of a shoppingmall in short term is ORR - Sarjapur due to the lack of existing andunder-construction mall space. Meanwhile Bangalore North andOld Madras Road have potential for development of malls inmedium to long term.

Owing to significant existing and impending mall space, Whitefielddoes not have potential for development of new malls in short tomedium term.

Shift in the developers’ interest towards Bangalore North has made

way for many planned retail projects in this micro-market.

Consequently, this is a potential choice for mall activity in the

coming 3 - 5 years.

Retail activity in Old Madras Road is expected to gain momentum

in medium to long term, mainly due to increase in residential

supply, improved connectivity and economic development towards

Hoskote Industrial Area.

As against the last decade wherein development of malls was still

in a nascent stage, the city is currently witnessing a differentiation

phase with the development of newer formats of malls and retail

infrastructure. Previously malls in the city were primarily

community malls. However, entry of national developers and

availability of larger land parcels have led to the development of

regional malls in the city.

Malls in the city are largely anchored around an Apparel and

Footwear brand, F&B, entertainment and / or a hyper-market

chain. Till the recent past, entertainment in the retail malls was

confined to multiplexes however; going forward other forms of

entertainment are going to be an important part of the anchor.

With significant luxury brands planning to foray in to the city’s

market, demand for luxury malls is likely to remain strong.

Despite increasing mall space in the city, key high-street locations

of the city shall continue to attract retailers mainly due to better

brand visibility, optimum catchment area reach and convenience of

access.

In light of 51% FDI allowance for multi—brand retail by

Government of Karnataka - the demand for retail space in the city is

expected to strengthen in the coming years. Prevailing low

vacancy rates, high footfalls and strong economic outlook are likely

to positively impact the rental values across both shopping malls

and high street locations.

29

TERMS OF REFERENCE

CLASSIFICATION of the city: To understand the characteristics of the retail spaces across Bangalore, the city has been sub-dividedspatially in to three major zones:

Micro-markets

Central Business District (CBD)

Secondary Business District (SBD)

North East

South East

South West

North West

Peripheral Business District (PBD)

Areas covered within the micro-markets

M.G. Road, Brigade Road, Magrath Road, Richmond Road, Lavelle Road, Cunningham Road,Langford Town, Brunton Road and Residency Road

SBD locations based on the geographic boundaries have been further categorized in to fourquadrants:

Indirangar, CMH Road, Old Madras Road (till K.R.Puram Bridge), Banaswadi, Bellary Road (till ORR)

Koramangala, few locations of Bannerghatta Road and Hosur Road (till Silk Board Junction)

Kanakpura Road (till ORR), Jayanagar, JP Nagar, Vijaynagar and few locations of Rajajinagar

Sadashiv Nagar, New BEL Road, Sanjay Nagar, Malleswaram and few locations of Rajajinagar andYeshwanthpur

Peripheral locations of Whitefield, ORR - Sarjapur, Electronics City and Hosur Road, BannerghattaRoad, Kanakpura Road, Mysore Road, Old Madras Road, Tumkur Road and Bangalore North

31

TERMS OF REFERENCE

Definitions

High-Street

Shopping Malls

Areas covered within the micro-markets

A high-street refers to the retail street in a city with street lined retail stores.

A shopping mall is a group of retail establishments that is planned, developed, owned and managedas a single property with on-site and basement parking

Tenant Category in Shopping Malls

Anchor Tenant

Vanilla Store

Unit of Measurement

Gross Leaseable Area (GLA)

Useable Carpet Area (UCA)

Common Area

Useable Carpet Area (UCA)

The major chain/s or department store/s in a shopping mall positioned to produce traffic for smallerstores in the facility

Smaller format retail stores in a mall are call

Retail spaces are measured on the following three bases:

GLA is the total floor are designed for a tenant’s occupancy and exclusive use, including basements,mezzanines or upper floors measured from the centerline of joint partitions and from outside wallfaces. It is generally expressed in square feet (sqft) and rents for shopping malls is payable on theGLA.

Useable carpet area or the carpet area is the total area of the premises measured from internal walls

Common Area include usable consumer horizontal and vertical circulation areas. In some cases a portionof landscaped / outdoor piazza would also constitute to common areas.

Loading Factor is the ratio of Loss Factor and UCA. Loading factor across shopping malls inBangalore for,

Anchor tenants varies between 20% and 30%

Vanilla stores vary between 50% and 60%.

High-street locations ranges between 15% and 25%.


TERMS OF REFERENCE

Operating Costs

Tenants follow the following rental models:

Rent

Maintenance Charges

Utilities

Insurance

Car Parking

Stamp Duty

Registration Charges

Lease Terms

Lease Period

Security Deposit

Hours of Operation

Rent Escalation

Fixed rental with annual escalation

Revenue Sharing Model which involves a fixed component (Minimum Guarantee) and a

variable component which is based on a percentage earned on the retailer’s sale.

Maintenance of the common areas namely upkeep of the corridors, Annual Maintenance Contracts(AMC) for all the equipment provided by the developer is under the purview of the developer or thelandlord; however expenses towards the same are borne by the tenant and is payable on the GLA.

For both high-street and malls, the tenant is accountable for the payment of electricity, water andtelecommunications within their premises which is charged at actuals.

Insurance for the building / mall is under the purview of the developer or the landlord.

As per market practice, shopping malls across Bangalore offer minimum 1 car park for every 750sqft leased; charges for which are included in the rent. Any additional car parks required by thetenant over and above this attracts an additional charge.

Stamp Duty for the premises shall be borne by the tenant. Based on the tenure of the lease StampDuty is applicable as follows:

0 - 10 years : 1% on annualized Average rentals of total lease tenure and Security Deposit

10 - 20 years : 2% on annualized Average rentals of total lease tenure and Security Deposit

Registration charge for the premises shall also be borne by the tenant. Based on the tenure of thelease registration charges are applicable as follows:

0 - 10 years : 0.5% on annualized Average rentals of total lease tenure and security deposit

10 - 20 years : 0.5% on annualized Average rentals of total lease tenure and security deposit

Typically lease period is as

follows

15 - 21 years for Anchor stores

6 - 9 years for Vanilla storesAs a market practice, the landlord / developer charges an equivalent of 6 - 8 months rent as interestfree security deposit.

For both high-street and malls, maintenance charges are computed considering the hours ofoperations to be in the range of 10 - 12 hours

As per the current practice, rental values for malls or high-streets are escalated by 5% every yearor by 15% every three years

33

GLOSSARY

IT Information Technology

ITeS Information Technology enabled Services

INR Indian Rupee

BCC Bangalore City Corporation

CITB City Improvement Trust Board

BDA Bangalore Development Authority

FDI Foreign Direct Investment

BIAL Bangalore International Airport Limited

GLA Gross Leasable Area

ORR Outer Ring Road

MBO Multi-Brand Outlet

GDP Gross Domestic Product

HNI High Net Worth Individual

UCA Usable Carpet Area

ATD Average Trading Density

34

CBD Central Business District

SBD Secondary Business District

PBD Peripheral Business District

THANKYOU