Low rentals make mall developers, retailers opt for revenue sharing
Of every 10 new malls, six to seven opt for this model, according to C&W With slowdown seemingly slipping away from sight, an increasing number of mall developers and retailers are now opting for rental revenue sharing model. As vacancy levels and rentals continue to dip especially in the metros, developers are banking on this ‘performance based sharing’ scheme to make up for the damages.
According to industry experts, the model comprises retailers sharing a percentage of their sales with real estate developers as a way of sharing risks. The move to adopt such a model is seen to be triggered by low footfalls that has been the bane of retailers since some time as well as lower rentals which has been troubling real estate developers during the slowdown.
As far as the revenue sharing ratio is concerned, industry players say, factors like format, market scenario, clients and type of properties, among other things come into play. “We have been opting for revenue sharing model with retailers in some of our properties. However, the ratio is dependent on several factors including rentals, kind of market, economic scenario, type of client, and type of properties, among other things. For us, the rentals for retailers vary from anywhere between Rs 10 per sq ft per day and Rs 800 per sq ft per day,” said YK Tyagi, executive director at DLF.
More : business-standard.com