In H2FY22, retail mall rental income increased by 23% while pre-covid levels were attained by 80%
According to the research, the debt service coverage ratio, which had been below 1x for two years running, is anticipated to increase to 1.10-1.15x in FY2023.
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Retail malls have had a strong recovery in their operational metrics since August 2021 as a result of the economy's opening up, reaching 80% of the pre-covid level in the second half of the fiscal year 2021–2022.
According to an ICRA assessment, the resumption of multiplexes along with the high vaccination coverage caused the retail malls to recover.
According to the research, the higher rental recoveries will cause the debt service coverage ratio, which was less than 1x for two straight years (FY2021 & FY2022), to increase to 1.10-1.15x in FY2023.
The tendency has mainly continued in H2FY2022, with the exception of a temporary interruption caused by Omicron, according to an ICRA research report. According to the data, pre-covid levels were attained by retail trading values in Q3 of FY2022 and were surpassed in Q4 of FY2022. According to the research, pre-Covid foot traffic levels would be reached in Q3 of FY2023.
The rental revenue improvement is faster post-second wave, with recovery at 74 percent for Q2 FY2022 (as opposed to 34 percent for Q2 FY2021) and reaching 102 percent of pre-Covid levels in H2FY2022, according to Anupama Reddy, Vice President & Sector Head, Corporate Ratings, ICRA.
"In FY2022, the rental income in ICRA's sample set—eighteen malls with a combined 11.7 million square feet distributed across seven states—saw an increase of over 56 percent, reaching close to 80 percent of pre-Covid levels," says ICRA.
Reddy added that a total of six cities—Delhi-NCR, Mumbai, Bangalore, Hyderabad, Chennai, and Pune—added new retail space totaling about 11 msf in FY2021 and FY2022.
"The incremental space absorption throughout this time, however, was only about 4 msft, which led to a considerable increase in vacancy levels from 18 percent in FY2020 to 23 percent in FY2022. The rental income is anticipated to rise by about 30% on a same-store basis in FY2023 and is probably going to surpass FY2020 levels by about 4%–6%. With the trade values returning to normal, occupancy is anticipated to increase in FY2023 "Reddy stated.
