Malls may take six months to normalize – Prestige Estates

Prestige Estates Projects, which operates some of India’s top malls such as Bangalore’s Forum Mall, said retail spending has recovered to around 70-80% of normal levels, though it may take several months for it to fully normalize.

“The malls should be back in the next six months, they should stabilize fully. Hospitality should take a little longer.It will take 12-15 months from now to stabilize,” said Prestige Estates Chairman Ifran Razack, responding to questions on mall traffic during an interaction to explain the company’s Oct-Dec performance.

Malls and hotels have been the hardest hit in the aftermath of the COVID-19 pandemic, with people keen to avoid closed spaces for fear of viral transmission. Razack however said certain segments have already come back to normal, while others are still behind.

Overall retail consumption has reached about 70-80% of the previous year spending, he said.

“That’s a good indicator that things are getting back on track on retail. Yes, the cinemas are still a question mark. There is a sort of resistance initially. People have a sort of fear factor about getting into a cinema hall,” Razack said, adding that the situation was not the same for more open formats and shops. “If you come back to the food and beverage business today, it has come back to near normal. In fact, they are trading as before,” he pointed out.

Prestige Estates has a ringside view of the situation as, in addition to be being a provider of space for high-end retailers, it is often a business partner as well as some of its clients have entered into revenue share agreements with it.

Razack said the company, like other mall operators, allowed some discounts in the fixed portion of the rent to help the clients tide over the lock-down, but things should normalize soon.

“Just to ensure that they survive that we have reduced the rentals. We understand that from 1 April 2021, they will all revert to their contracted rental, the minimum guarantee. Along with that, we have the revenue share percentages. I’m pretty confident that by coming April, we will revert to our original levels of rent, and if trading improves, we will get an upside also,” he said.

The company posted stellar growth for the Oct-Dec period, and Razack said his team is doing everything to make sure that it was not a ‘one quarter’ wonder.


The company said it has a strong line-up of residential project launches, including two launches coming up in Mumbai and one in NCR.

One launch is almost ready in Hyderabad, and another one is in the pipeline Hyderabad, the chairman pointed out, adding that the company is gearing up to launch its biggest ever project, the Prestige Smart City township, on Sarjapur Road in Bangalore.

“Therefore there’s enough projects upcoming and under planning to sustain this momentum. Now, it’s all about getting those approvals in place and launching these projects one after the other.”

Razack said the company expects a strong new year. “If you look at FY19 and FY20, we have delivered 45 mln sq ft, in spite of the way the market has been. It must be the largest execution and delivery by anybody.

“Our locations and the product offerings and the pricing are very very attractive. We have products starting at Rs 25, 30 lakhs and going up to higher prices.

“The sweet spot has always been between the 75-80 lakhs to 1.5 cr, and the majority of our offerings belong to that bracket. We are very confident of our upcoming launches.”

He added that the company is benefiting in the residential market as there is increasing customer preference for larger, well-recognized names in the residential real estate market.

“The traffic now is towards the organized, credible top-tier developers, that is what you see. The consolidation process is getting fast-tracked… overall, demand is very good across markets like Bangalore and Hyderabad.”

However, he said the company is won’t focus on the luxury residential market in the near future. “[We have] no plans to launch any new project in this segment [luxury/premium] right now. Whatever we are launching is in middle-income and affordable categories,” he said.


Prestige is also one of India’s top developers of office real estate, and Razack said things are not as resurgent in this space as they are in the residential category.

Some of the smaller companies have been forced to shut down, but the bigger ones are still standing. Unlike in retail, the office real estate segment has not seen rents being discounted. Occupancy levels are at around 95%, the company said.

The clients are “still paying us rent. But it’s imperative that people start moving back to their offices.. Currently, it’s a flux, a stalemate,” Razack said, adding that he expects the long-term requirement for office space to remain unaffected by the pandemic.