The rental income of malls is expected to increase by eight to ten per cent year-on-year (YoY) in the financial year (FY) 2024, said the rating agency Icra.
Icra expects the credit profile of the mall operators to remain stable driven by healthy net operating income (NOI), moderate leverage and healthy debt coverage metrics.
Across the top six cities in India, the total supply stood at seven marginal standing facility (MSF) against the net absorption of four MSF resulting in an increase in vacancy levels to 19% in FY2023 from 16-17% in FY2021-FY2022.
Despite expected healthy leasing, a new supply of nine to ten MSF is likely to see vacancy levels staying range bound between 18 to 19 per cent in FY2024, it added.
“Delhi NCR and Chennai will account for around 60 per cent of the FY2024 new supply,” according to Icra.
Trading values for Icra’s sample reached 125 to 127 per cent of pre-Covid level in Q4 FY2023 and 117-119 per cent in FY2023 driven by the increase in consumption of premium and luxury products.
In FY2024, trading values are expected to improve by four to five per cent with healthy sales across the product categories like jewellery, electronics and apparel and an increase in spending toward food, beverages and entertainment segments.
Rental income for Icra’s sample set witnessed strong growth of 78 per cent YoY in FY2023 (on a lower base of FY2022) and is higher by 25 to 27 per cent compared to pre-Covid levels, driven by an increase in occupancy levels and higher revenue share rent backed by an increase in retail trading values across cities.
