Why Real Estate Developers Are Losing Interest in Building Malls

Cost does play an important role in dissuading builders from taking up mall development projects, but market saturation also contributes to the dissuasion of the developers. Compared to previous years, this year only 2.4 million sq. ft of mall space would be developed. This is almost half of what has been developed in the previous years.

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The land costs are rising, especially in major cities, due to which it has become difficult to invest and witness appropriate returns for large establishments such as malls. These assets take 3 to 4 years to bring it to operation ready status. Such long term investments requiring increased funding would only hold up finances for the builders. The scenario gets even more complicated owing to the uncertainty of the property market at the time when the mall gets completed.

Another important factor which has affected the scenario is that the consumption has not grown in tandem with the growth in prices of the land and other property assets. It is this factor which has made the construction of malls unviable at the moment. A good example of this can be seen in Mumbai where the land prices have gone up by 50 times in just 10 years whereas the consumption have g