Malls were supposed to be the symbols of prosperity in India’s ‘boom-towns’ like Patna. Instead they have turned out to be edifices of gloom. Notwithstanding their bright facade, these half-empty buildings in Patna reveal the other side of the Bihar growth story, as vacancy levels rise and consumption remains low.
The bubble has burst. There has been excess capacity in Patna and not so much demand. Patna hasn’t seen a huge consumption story yet and salary levels too haven’t increased the way they were expected to.
Vacancy levels in malls across Patna are growing at an alarming rate. In Patna, over a third of the space is unoccupied, as against just 7% in 2011. Supply of retail space has increased dramatically, but demand from retailers and overall consumption has dropped.
Many developers overestimated the appetite for retail in Patna. They did not realize that the consumption threshold here was low. The slowdown in the economy and lack of disposable income in the hands of the youth of Patna has taken their toll. Every evening the town’s youngsters gather around a couple of glitzy malls. But, they just do not spend …like the folks in big cities. It isn’t easy closing leasing deals with retailers these days in Patna. The retail boom did not happen the way it was expected. International brands are still being cautious about coming to Patna.
The youth account for 60% of mall consumption in India. But youngsters residing in Patna lack the purchasing power of their big-city counterparts. It’s mostly the elders in a family who are the decision makers and they have a propensity to buy unbranded items found in the local markets.
Real estate developers in Patna can hope that the entry of large format retailers would create demand for retail space and give a fillip to development of malls in Patna. This would now depend on state government, now minus BJP, allowing FDI in retail in Bihar. This apart, in the initial stages, it would help absorb surplus retail space across shopping malls in Patna.