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Mall operators in India to register 12% revenue growth in FY25: Crisil

Mall operators in India are projected to achieve robust revenue growth of 10-12% during the current financial year (FY25), building on the 15% growth recorded in the previous fiscal year, according to a Crisil report released on Tuesday.

The growth will be driven by contractual rental escalations, improved occupancy rates due to the ramp-up of malls launched in the past two years, the full-year impact of newly operational malls, and an increased share of tenant revenues supported by consumption growth, the report said.

An analysis of 32 ‘Grade A’ malls rated by Crisil Ratings indicates that steady rental income and strong balance sheets will help maintain stable credit profiles for mall operators.

For FY25, the focus will remain on maximizing occupancy in malls commissioned over the past two years, as under-construction projects are still in early stages, the report highlighted.

“Overall occupancy for malls is expected to rise to 92-93% this fiscal from 89% last fiscal. This growth will be led by increased occupancy in newer malls, while established malls will maintain stable occupancy rates of around 95%, with timely lease renewals,” said Gautam Shahi, Director at Crisil Ratings.

Rental escalations of 4-5%, coupled with moderate retail consumption growth, are expected to propel revenue growth for mall operators to 10-12% this year, Shahi added.

Retail consumption in malls moderated to 3-5% in the first half of FY25, down from 12.5% during the same period last year, due to a high base effect and the impact of the heatwave. However, the festive and wedding seasons, along with favorable weather conditions, are expected to boost consumption in the second half.

Tier 1 cities have experienced greater moderation in consumption compared to Tier 2 cities, but the impact on mall operators will be limited, as revenue sharing accounts for only 10-15% of total revenue, the report added.

Mall operators have maintained strong operational efficiency, with EBITDA margins consistently around 70% in recent years, and this trend is expected to continue in FY25.

(Inputs from IANS)

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