An oversupply of retail space combined with an aversion to expansion by retailers has caused a sharp fall in retail rents in key markets, in line with the overall mood of an economic downturn. A further correction is seen ahead.

According to a first-quarter survey conducted by real estate consultancy Cushman & Wakefield, both malls as well as main street stores saw rental values drop by 11 to 42 per cent in the National Capital Region and Mumbai in the January-March quarter. Mumbai saw the sharpest decline in rents fbr both malls (42 per centin Goregaon) and main streets (38 per cent in the Colaba Causeway).

In NOR, the main street1ocation of M Block, Greater Kailash, witnessed a 25 per cent decline in rental values while mall recitals in Noida dropped by 17 per cent. Ahmedabad saw rents plunge in malls and main street locations with correetiorts in the range of 20 to 36 per cerit over the last quarter, the survey revealed.

"Even while a correction in rerital values is a poterttial catalyst R)r retailers to re-enter, receding end user demand has severely curtailed uptake of space," said Rajneesh Mahajan, executive director, retail s at Cushman & Wakefield India.

"The trend of further correetion is likely to continue in short tomediumterm."he said.

In the first quarter of 2009, 1.4 million square feet of fresh mall supplies was added across seven major cities. The mall supply by end of 2009 is estimated at 17.66 million sq.ft.

NCR witnessed the highest mall supply in the country at 8 lakh square feet.