Mall Rentals – Daily Revenue Share Model

Mall rentals in India have come a long way – fixed rental which were sky rocketing in 2006-07 shifted towards revenue sharing with minimum guarantee in 2008 and now Pay as You Go is the emerging business model. Even as the recovery is still underway, the supremacy of Mall Owners has started kicking in. They now want their retail tenants to part with their share of revenue on a daily basis rather than Quarterly, Monthly or upon achieving some threshold in sales.

Phoenix Mall in Mumbai has implemented the same and Atul Ruia, Manager said that

We are receiving quite positive response and have planned to implement it (the daily rental model) across the country.

Mr. Kishore Bhatija of Inorbit said,

We are looking at implementing first at our Hyderabad mall. Like Phoenix, Inorbit too has been in favour of the new model for its malls at Hyderabad, Pune and Bangalore. Inorbit’s mall at Hyderabad, which opened in October this year, has seen 66% occupancy on the revenue sharing model, while the remaining would be on daily basis. We believe any innovative method that could streamline the system and synergy between the owner and the retailer is welcome.

Nirmal Lifestyle is likely to adopt this model of rental in its second phase. The debate on Mall Rentals Vs Retailers will go on for the next couple of years.