Mall footfalls down 75%-80% – Prestige Estates Projects

Forum Mall, before the COVID-19 pandemic

Prestige Estates Projects Ltd, which operates nine malls including The Forum Mall in Bangalore, said footfalls are down 75%-80% at malls due to the COVID-19 pandemic.

Speaking to investors after detailing the company’s June quarter results last week, company officials also said they were seeing signs of stress among customers of residential properties, even though interest among NRIs remains buoyant.

Malls in Bangalore, Prestige Estates’ primary market, reopened in early June after remaining shut for nearly 2.5 months.

“Since reopening malls across the city, ours included, have been grappling with low footfalls of 20% to 25% of the normal figure despite stringent measures taken to protect shoppers,” said Chairman and MD MR Jaishankar. “We expect this segment will take some more time to normalize and with some long-term structural shift towards online retailing that has been accelerated by the Wuhan virus.

“However, we are still confident that in the long run, there will always be a requirement for well-designed retail spaces in under-served locations, providing a combined experience of food, entertainment and shopping,” he added.

To help its tenants, Jaishankar said the company offered a 50% discount on rentals to those of its tenants who have been allowed to open.

“The focus has been the retention and renegotiation of leases and collection of outstanding payment from our tenants. We have approached the situation fairly in a very reasonable manner,” he said, adding that it would take till about March 2021 for the company to be able to charge full rentals at its malls.

Meanwhile, establishments such as multiplex theaters and in-dining restaurants continue to be closed at most malls.


Another segment that is seeing major pain is the hotel sector. Prestige Estates runs several hotels in India, including under brands such as Holiday Inn and Sheraton, and has a portfolio of over 1,200 rooms.

It said hotels were opened on June 8, but were seeing an average occupancy level of 11% (as of the second week of August).

“..our hotels started feeling the impact of the virus from the beginning of March 2020 itself with a spate of cancellations coming in,” Jaishankar said. “The nationwide lockdown and continuing restrictions in travel have caused havoc and occupancies to crash to single digits.”

At present, he said, most of the hotels are mostly or entirely dependent on demand for self-quarantine facilities.

“The outlook for next quarter, Q2, to continues to be subdued until such time business travel restart opening up and we also see large MICE activities that may be allowed by the government,” he added. 


The company also said it was seeing ‘stress’ among buyers of residential property.

Sales (bookings) fell by 85% on year in April — immediately after the lock-down was imposed — but were down only 35% in June, Jaishankar said. For the three months from April to June, bookings were nevertheless down 60% on year.

Rajendra Joshi, CEO of the company’s residential business unit, said used to see about 15% to 16% of its flats sold (booked) within the first three to four months of launch.

“That definitely has reduced in the one project that we have launched in this quarter because of the COVID impact. So we believe that it will improve, but definitely compared to the pre-COVID scenario, it will probably take a little longer for us to reach that 15%, 20% mark,” he said.

Besides the slowdown in demand, CMD Jaishankar highlighted three trends seen in the residential market during the Apr-Jun period: resilient interest from NRIs, a preference for bigger houses and a bias towards completed properties.

“Customers preferred completed and near completion inventory over under construction units,” he pointed out.

In terms of size, there was an increase in about 15% in terms of the unit sizes that were seeing high demand, which may be related to the final factor — a shift in the buyer profile towards NRIs and older, well-settled individuals.

“ terms of segment of the buyers who are in the market now, they are people with assured income streams and we are also seeing that the age profile in this quarter has slightly increased because those are the people who have income assurance much more than the younger ones who are just entering the income stream,” Joshi pointed out.

For Prestige Estates Projects, the proportion of NRI customers increased to 25% during the June quarter from 12%-15%. Rival Godrej Properties too reported that NRIs accounted for 50% of the buyers of its residential properties during the quarter.

Joshi believes the continued interest from NRI buyers may be related to the deteriorating economic conditions in some overseas countries.

“We do think that NRI demand will continue because the two locations which contribute significantly to the Indian real estate market are the GCC [Gulf Cooperation Council countries] and the US. Given the overall uncertainty in GCC, which was there even pre-COVID — COVID only contributed to it — we do expect that the demand from the NRI customers will continue because I think a lot of them are looking for a place to stay when they come back. I think that is what is driving the demand right now,” he said.