Hyderabad recorded the lowest mall vacancy of 1.1 per cent and no new mall supply was witnessed in the quarter, according to a report released by consultant Cushman & Wakefield.

Owing to moderate demand and lack of lease renewals, the rental values in malls continue to be stable. While most retailers have put their expansion plans on hold till next year. They have adopted a wait and watch policy with a few transactions in the footwear and apparel segments in Banjara Hills and Madhapur micro markets.

This has lowered the mall vacancy level by 0.7 per cent this quarter.

Jaideep Wahi, Director, Retail Agency, Cushman & Wakefield India, in a statement said, "Hyderabad retail market is marred with inordinate construction delays. In spite of enjoying the lowest mall vacancy in all cities, no mall supply has commenced since 2010."

"Rental values have remained stable but with an upward bias given the fact that any lease worthy place will command a premium should such a space is freed up," he said.

In the high streets Raj Bhavan Road and Somajiguda saw a price correction of around 4.5 per cent over the previous quarter. The rest of the locations experienced stable rentals specially on account of development of new supply in Kukatpally to Madinaguda stretch, Jubilee Hills, Chaitanyapuri to L.B.Nagar.

With favourable rentals, potential catchment areas and flexible leasing terms on offer, Habsiguda, L.B. Nagar, A.S. Rao Nagar and Dilsukhnagar high streets have registered quite a few transactions.

Addition of supply in the first quarter of 2013 is likely to add mall space. But the mall rental values are anticipated to be static. About 4,25,000 sq.ft of mall space has been deferred to next year.

>rishikumar.vundi@thehindu.co.in