'Realty firms postpone shopping mall construction in 8 cities'

Realty firms have delayed the construction of shopping malls in eight major cities due to large vacant space in the existing complexes, according to property consultant Cushman & Wakefield.

"The retail real estate market recorded a deferment of more than 30 per cent of retail mall space against the projected supply for the first half of the year," C&W said in a statement.

The consultant, however, said the deferment was necessary considering the high vacancy rates in the shopping malls and cautious approach adopted by retailers on expansion.

The eight major cities (Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune) witnessed a fresh mall supply of 2.27 million sq ft during first half of 2012.

"Approximately one million sq ft of expected mall supply was deferred to second half of the year or next year. The overall vacancy rate for the major cities as of H1, 2012 stood at 19.6 per cent, marginally higher than the previous quarter.

NCR saw the highest mall supply deferment of over 80 per cent ensuring the city maintained 28 per cent vacancy levels. NCR saw only 1.2 lakh sq ft of mall supply in H1. Bangalore saw the highest mall supply of 1.5 million sq ft in H1 2012.

"This slowdown in mall construction need not be viewed as a negative growth indicator for the retail real estate segment. The current pace is, in fact, expected to help in maintaining a healthier supply to demand equation; especially for oversupplied micro-markets," C&W India Director Retail Agency Jaideep Wahi said.

"With high vacancy levels as well as cautious expansion plans of retailers, the deferment of supply is a necessary measure to bring stability in the retail market," he added.

According to report, the rental values across most mall destinations within these 8 cities remained largely stable, except for certain micro-markets in Bengaluru, NCR, Kolkata and Mumbai where mall rentals have seen a growth over the previous quarter in the range of 2-13 per cent.

Elgin Road in Kolkata recorded the highest growth in mall rents at 12.4 per cent over last quarter mostly owing to renewals of existing tenants at a higher value.

Some prominent high streets destination recorded higher increase in rental values as against malls, reflecting the bent of interest amongst retailers for high-street.

Select locations across Bengaluru (MG Road, Jayanagar, Koramangala, Vitthal Mallya Road) recorded increase in rental by 8-9 per cent over the previous quarter.

Camac Street in Kolkata saw the highest increase in high street rentals at 25 per cent followed by MG Road in Bengaluru at just over 9 per cent. Gurgaon and Pune also saw increase in high street rents by 7-8 per cent.

Source: http://www.deccanherald.com/content/263504/realty-firms-postpone-shopping-mall.html

Chennai IT complexes may have to pay more property tax

Chennai

Large multi-national firms and IT companies in the city may have to start shelling out a higher amount as property tax from the next financial year. The Corporation of Chennai, which has found that IT companies earning higher profits than local grocery stores come under the same tax bracket, has decided to look into the issue.

A revamp in the gradation system and tax slabs is likely. “We are going to meet and discuss changes in the classification of buildings. IT parks and MNCs maybe brought under a special category or a separate slab could be created for them,” said a revenue officer. Corporation sources said it might require an amendment to the Corporation Council Act, but that it was subject to government approval.

Presently, there are different tax slabs for commercial and residential properties and a separate slab for special commercial buildings. “Special commercial buildings, including movie theatres, marriage halls, lodges, hotels and restaurants, pay higher tax than normal commercial buildings,” said the official.

The council has found that some of the top shopping malls, multi-national companies and IT parks have been categorized as ordinary commercial buildings. “Some of the companies’ profit margins are higher than theatres and hotels, but they are still not part of the special category,” said the mayor.

The council, which plans an inquiry into why taxes were not revised in 2003 and 2008, has been toying with the idea of raising property taxes, its main source of income, for over a year now. Against the targeted 558 crore, it had collected only 227 crore till January 31.

Source: The Times of India, Chennai