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Friday, November 14, 2014

Why Real Estate Developers Are Losing Interest in Buying Center Building

Well, it came as a surprise, but property developers lost interest in building any new shopping center, especially in New Delhi and NCR. This does not indicate in any way that other cities across the country are not included in these results. Only when people have become accustomed to the "cultural center", this decision could impact the business aspects of major brands as market dynamics today showed intense competition.

Factors That dissuaded Developer From Shopping Center Building

Cost does not play an important role in DISSUADING builders take development projects centers for shopping, but also contribute to the developer dissuasion market saturation. Compared with previous years, this year only 2.4 million sq. Galactic center space will be developed. This is almost half of what has been developed in previous years.

The cost of land is increasing, especially in major cities, because it has become difficult to invest and see the appropriate return for large establishments such as shopping centers. These assets will take 3 to 4 years to bring it to the status of existing operations. Long-term investments such as requiring increased funding will only financial block for builders. This scenario becomes more complicated because of the uncertainty of the property market at a time when the shopping gets completed.

Another important factor that has affected the scenario is that the decision is not keeping pace with the growth in the price of land and other real estate assets. It is this factor that has made the construction of the shopping center, which is not allowed at this time. A good example of this can be seen in Mumbai where land prices have increased by 50 times in 10 years while consumption has increased by 3 times and rents have doubled in the same period. All this gives reason unfeasible investment to develop centers of shopping.

Among the reasons behind the closure Mall

The past two years have seen the development of approximately 120 centers where about 40 centers have been shut down. The economic downturn has certainly contributed to the closure of the center, but the main problem faced by the owners of the centers of shopping is high vacancy within their organizations. This is the main reason behind the closure of more than 24 centers in Mumbai, Delhi-NCR, Bangalore and major cities other.

Center purchase building requires specific expertise and at this time, it is clear that only those who want to build a portfolio of shopping are the ones who succeed. Others are just filled with empty spaces in dire need of accommodation. One of the reasons behind the high vacancy rates (as high as 19% in regular malls across the country) is the lack of sufficient quality. Vacancy in the shopping high grade is 10%, which is almost half the level of vacancy in the centers of other shopping.

What is Driving Growth in Malls in smaller towns?

Places such as City, Tiruvanantapuram and Indore are witnessing a builder participation in the establishment and development of centers of shopping. The city is popular because the price of land around INR 1000 per square. Ft. Which is quite reasonable for developers to invest and later retrieval. Another factor that makes these places profitable is that in small towns, people often get attracted to the mall and they are bound to visit their shopping experience a new one. The crowds and the frequency of visits with good facilities tempt businesses and brands that take the road out of the middle. So considering the current scenario, places like Indore will provide fertile soil and good prospects for shopping.

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