Real estate major DLF will look at increasing its retail footprint to over 7.2 million square feet (sq ft), up 70 per cent, from the existing 4.2 million sq ft, in 2025. At least three retail projects will come on-stream across Delhi-NCR and Goa, says Pushpa Bector, Senior Executive Director and head of DLF’s retail division.

Post pandemic recoveries have been strong and the company now sees a 25 – 30 per cent increase in rentals in Delhi – NCR region. DLF’s current retail assets include six premium and two luxury malls. In an interview to businessline, Bector talks of the post Covid recovery and trends, expansion plans and movement of rentals across DLF’s retails assets. Excerpts:

Q

How have recoveries been after Covid?  

Retail rebound has been extremely strong. We first thought that this was probably revenge buying and we closed the year, up 30 per cent in terms of sales over pre-Covid. Vacancies were under 2 per cent. Since sales rebounded, we went ahead looking for better rentals last November onwards.

Luxury rebounded the most. Indian designers had taken a beating during the pandemic. But with the wedding industry picking up now, that segment did well. Pre-Covid, we identified athleisure or comfort wear and expanded that segment even during Covid. This continues to do well. Another category that has done extremely well and continues to do so, is the food and beverages. Anything that has a YOLO effect (You Only Live Once) has done well.

Q

Have these trends held on?

After a strong start last year, we saw some moderation in sales April onwards. But post May 15, sales picked up again. We anticipate sales growth to be aggressive October onwards.

Early trends indicate that there was a large merchandise pile up at retail levels. We were anticipating an early sales period, and that has happened. People have gone out for international travel quite aggressively and in spite of it, we saw green shoots (in sales) May onwards. The back-to school and back-to-work categories are picking up too.

At the retail end, we see people want to live a good life, have larger homes, and so on. In a way, what is happening in India now is something that the US experienced some three – to – four decades back. China during its great days saw such a retail boom. Today, we in India, are at the cusp of that boom.

Q

Since its ‘boom time’ again, how are you panning out your expansion?

This is the decade for retail and DLF has created markets and improved quality of living in and around the Delhi-NCR region. We had envisaged our expansion plans during the Covid period itself. We are in the process of constructing three projects. And overtime, we would like to double our portfolio. Post the ‘Mall of India’, we are around 4.5 million sq ft (across 8 malls). All the malls are of different types.

We found that the entire offices or office spaces needed amenities or a portfolio developed around offices, and so created an office amenities wing and that in itself is around one million sq ft. This one million sq ft will add a leverage to the office portfolio and it has bore fruit with office space take up increasing.

The next aspect was open-air plazas. We have residential communities that are mini cities. And it is here that the plazas will play an anchor to those communities. We are coming up with such plazas in Delhi and NCR. These would be different to malls that we have.

The third aspect was expand the city mall portfolio in Goa. These three projects (mall) will be sometime in 2025. This expansion takes the portfolio to over 7.2 million sq ft. And then we have already announced that we would do something for ‘Emporio’.

Q

Is the luxury(brands) portfolio set to be expanded? 

We are under-serving luxury at this point. There is a need for more luxury brands to come in. What was happening was that these brands would previously go to China first, before serving India. But now, with whatever is happening in Europe, they (brands) are looking to reach out in India first. 

Q

Are brands willing to pay for higher rentals? 

We at DLF had always gone for a minimum guarantee revenue share approach. From last year to this year we are anticipating a 20 per cent rental growth, and this is quite an aggressive one. This can only come in if we reset rentals across. And we did this.

Delhi-NCR is a landlocked region and is a high consumption market. There is no space for new projects here. We do believe that there is a headroom for rental increase and we have been doing that since November last year, whenever the opportunity came up. We have been asking for 30 per cent more (rental) and even 40 per cent in some cases. And on an average, the increase was 25-30 per cent. And yes, people are willing to pay these higher rentals as they see high density trading spaces, like in our case.

Rentals have been going northwards in our portfolio October-November onwards.

Q

And in case of office amenities?  

Office amenities is a very good business to be in as a standalone basis. But we are not commanding rentals similar to malls there. We command such (high) rentals in the malls because DLF has been able to place the as proven products. Going forward, if we do so across the office amenities portfolio, we will be able to command higher rentals there too.