A report by International property consultant Knight Frank highlighted the undiscussed issue plaguing India’s modern economy. It said the country has 21 percent or 57 of 271 functioning shopping malls in a run-down condition which calls for an overhaul immediately.
Knight Frank’s latest report: ‘Think India, Think Retail 2022’, says, as many as 21 percent or 57 malls across the leading cities in India are in different 20 stages of dilapidation. These 57 malls cover 8.4 million sq ft in gross leasable space. The efforts to reinvigorate shopping centers to attract renters, thereby pedestrian traffic, have been in vain.
The national capital region (NCR), which encompasses Delhi, Gurugram, and Noida, has 3.35 million sq ft of space taken up by Ghost malls, followed by Bengaluru with 1.38 million sq ft of area.
Next come Hyderabad and Mumbai with 1.14 million sq ft and 1.13 million sq ft space, each covered by dead malls.
The others in the top eight identified cities beset by ghost malls are:
- Pune: 0.37 million sq ft
- Ahmedabad: 0.37 million sq ft
- Chennai: 0.33 million sq ft
- Kolkata: 0.32 million sq ft of
What Are Ghost Malls?
The report describes that if a mall has a vacancy of more than 40% is a ‘ghost mall’.
Ghost malls are also called dead malls, zombie malls, or abandoned malls as they have a very high vacancy rate or a low consumer traffic level or are in the ruined state.
How Does It Impact the Economy?
At the micro level, a business running in the ghost mall would be directly impacted by low traffic flow. Less revenue generation would, ultimately, result in layoffs and difficulty coping with maintenance charges.
Without footfall, department stores in the mall will have bleak recorded sales volumes, and rental revenues from those stores will slump. If such a scenario amasses at the macro level, it results in the wastage of resources and a failed mechanism of employment generation.
Without hustle-bustle, smaller stores operating in big malls face the deepest dents. Their chances of losing revenue and customers and struggling with maintenance charges grow ten times.
What Reasons Led To Surge In Ghost Malls?
The lack of understanding by the developers in the mall business underpins the issue of burgeoning ghost malls.
“Some of the shopping mall assets developed in the golden era of mall development in India were in for a reality check by the dusk of 2008, when India was hit by the global recession. Developers who had jumped into the mall development business without any understanding of the demographics and demand were biting their nails,” says the report.
Other factors that led animated malls to turn ghostly are:
- Lack of due diligence
- Inadequate size and ownership patterns of malls
- Unsuitable Design
- Faulty Setup with dark alleys
- Unstrategic customer traffic flow management
- Low occupancy and lack of anchor tenants
The report underscored restoring malls, citing enormous assets trapped.
“Renovation and repurposing them into alternate uses can be one option as such assets are usually built on coveted land parcels in locations to vie for and can be monetized if strategize appropriately,” it added.
How Can These Ghost Malls Be Put To Use?
“The vacant spaces of ghost malls can be used for thrift stores, food and clothing banks, exhibition, presentation, and event spaces. Daycare, elder care, pet care, and even elementary and secondary schools can be opened. Workforce training centers and human development centers for government services can also spring up in ghost malls,” said Shishir Baijal, chairman and MD of Knight Frank India.
Leasing out empty spaces for long-term commercial use to local businesses that can not afford to set up offices in business parks or popular business districts can be a way ahead.