the mystery of Khan Market

We could never believe the rumors, despite the variety of sources who assured us it was fact: Khan Market is, everyone told us, the most expensive shopping real estate in the world.

kersy83
Photo by Kersy83

When we finally decided to research it, we uncovered a truth that was slightly less grand but no less implausible: Khan Market is actually the 16th most expensive shopping real estate in the world, according to Cushman and Wakefield, with a rent of $280 per square foot in 2007. It’s more expensive than the most expensive shopping districts in Moscow, Beijing, Oslo, and São Paulo, and only 14% less expensive than Orchard Road in Singapore.

Singapore’s Orchard Road is incessantly mobbed, lined by the world’s most modern malls, and filled with luxury and excitement. It’s easy to imagine its revenue driving real estate prices into the sky. As for Khan Market—the Delhi economy works in mysterious ways, true, but it’s hard to imagine Khan Market generating the kind of revenue that puts it on par with Orchard Road, even with its reputation as Delhi’s most cosmopolitan shopping area.

elluliini
Photo by elluliini

Khan Market is an elongated U-shaped collection of buildings, with storefronts running around the U and an underdeveloped inner alley dividing the middle. Its main entrance is flanked by magazine vendors, an electronics and music store, and a crowded and chaotic bookseller. A steady stream of tourists gape at the inner alley, rich foreign mothers wearing jeans and salwar shirts steer their children towards Chokola, and young men in pink polo shirts with popped collars head towards the sunglasses stores. Many of Khan Market’s tenants—appliance stores, plastics stores, butchers, chemists, stationary stores—are indistinguishable from those in every other market but for marginally inflated prices.

There are a number of clothing boutiques and upscale restaurants in the inner alley, but there are just as many drooping, dust-covered power cables and tourists crowded around open manholes watching men clear sewer blockages by hand. There is a McDonalds and a Subway, a few coffee shops, and a few luxury housewares stores, but Delhi’s Louis Vuittons, Christian Diors, Fendis, and Armanis are all ten miles down the road at the Emporio Mall in Vasant Kunj. There are vegetable sellers and imported grocery stores selling the same stuff found at every other import grocery store, for only slightly more money. Khan Market is crowded on the weekends, but no more so than any other market.

engineer
Photo by engineer

It’s a nice market, but it’s not nearly as nice as one would expect the 16th most expensive real estate in the world to be. It’s not selling particularly high-ticket items or generating unusually high volume—a latte at this Cafe Coffee Day costs the same as a latte in every other Cafe Coffee Day. With the exception of tailors who speak perfect English and design shirts and suits for Western tastes at Western prices, its selection isn’t terribly unique. So how can it be the 16th most expensive real estate in the world?

fluxsingh
Photo by fluxsingh

Khan Market certainly has its reputation working for it—it was, along with INA Market, one of the few places where one could buy imported goods in the decades before liberalization. Combine that with its location near many exclusive neighborhoods with heavy expat presences, Khan Market was probably where the rich and foreign used to spend their leisure time, before the air-conditioned malls began springing up and legalized imports rendered under-the-table cheddar cheese smuggling obsolete.

alvaro_macedo

So did reputation alone land Khan Market on Cushman & Wakefield’s list? Or is it somehow possible that the vegetable sellers and restaurants and butchers, despite the fact that they charge pretty much the same as every other upscale market, really are paying some of the world’s highest rent?

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17 responses to “the mystery of Khan Market

  1. As a matter of fact, a latte at the CCD in Khan is more expensive than their regular joints.

    🙂

  2. For many of the smaller businesses, well, the history of the market goes back a long way, to when it was in the far flung outskirts of a city which over the last fifty years has grown around it, and so many of those people still own the shops, and don’t pay rent. And so while many people now rent out their old shops, and move out of their houses (the upper level) and rent those out to shops as well, some of the old tenants have stayed put, because they do well enough to not need to put the place on rent, even though they’d probably make more money that way…

  3. its due to the ancient rent laws from British times that have given the renter’s progeny to stay and pay the rental price from the 1940s. + real estate in India has two faces, one official for tax purposes and the other actual business. The rental rates are very high for a franchise or new comer, but if your uncle’s cousin’s on the mother’s side twice removed owns or rents a space at 1940s rates, you can sure cut a deal of lower rent in exchange for the profits.

  4. I am following your blog for last few months.
    I like to read about India from a foreigner’s perspective.
    I like what I read.
    You are now getting INDIANISED.
    its growing on you.
    I agree to most of your observations.
    Why don’t you take a break and travel beyond Delhi.
    You cant get nicer people anywhere in the world.
    give it a try

  5. +1 for Manav

    Here too the culture changes every few hundred kilometers.

    Move to Mumbai or any other city for a while and it would be another cultural shock 🙂

    Kiran

  6. gSathe, injunplanna — If I understand you correctly, you’re saying that rents are high but only for newcomers? So the C&W survey is really only counting what McDonalds or Beneton is paying but not what Grover’s Tailors is paying?

    Is there an incentive to report excessively high rent expenses? Maybe that makes revenues look lower, helps them avoid taxes…

    Manav42224, Kiran — you arrange the jobs, we’ll make the move 🙂

  7. In Mumbai there are archaic rent control laws for residential property which make it impossible for landlords to raise rents or evict tenants. That is why it is very difficult to find rental property (unless you are an expat and they know there’s no chance that your children will continue living there after you at today’s rent 50 years from now). I find it hard to believe rent control would apply to commercial property in Delhi. I think the $280 per sq foot is a wildly exaggerated number.

  8. The rent actually was the highest, yes the top position like 3-4 years ago before relegating to the 16th position. Even I was shocked when I read it in Economic Times ( Indian equivalent of WSJ)

  9. its a downright mystery alright. There could be truth in false reporting of rates of rent. Also the owneers operating their own little shops is a definite possibility. Hope you solve this and let us know!

  10. @Jenny & Dave.
    That pretty much sums it up. Many new comers (read foreign franchises) aren’t inclined to keep two sets of books, hence they pay through their noses. Whilst the older folks and the ones open to skimming their taxable revenue are in business. If Grovers states he’s paying the full rent amount, the owner will have to declare the same, hence a loss for both. So they make a deal where Grover says he’s paying pennies while off the books he maybe paying higher (although not as high as the official market value) and both the owner and tenant get the benefit, one on less taxes, the other on getting more sales profit due to lower overheads

  11. hey everyone,

    Ourdelhistruggle is very informative and a great read, also look into
    theseguysblog.wordpress.com
    its a travel India blog but from a different perspective and also its absolutely hysterical.

  12. Location location location…. Khan Market is the market for the elites in Delhi who live in the highest value areas of the city directly surrounding the market and is also a short distance from the embassys and residences of top government officials and business leaders. Who wants to drive 10 km down the road through Delhi traffic if they can afford not to?Retailers recognize this and understand that it is the place to launch a brand presence into India. That is why it is so expensive.

    – From one New Yorker to another.

  13. What shocks me is that for one of the most expensive markets in the world, it is terribly maintained and downright filthy.
    Have you ever stood in a line outside the Big Chill? (Another great mystery – I mean it’s nice and all but a one hour wait at 11.30pm? Really?) Anyway, that’s one of the dirtiest, most broken down alleys I’ve ever been in and along with trendily dressed Delhi youngsters, you’re just as likely to see stray dogs fighting and giant rats running through the garbage. Inexplicable.

  14. anothernewyorkerindelhi

    I hate to be the bearer of sad news, but being the 16th most expensive shopping district in the world has taken it’s toll: Khan cha chas has closed! The owners didn’t want to pay a rent increase, and like that, poof, it’s gone. RIP.

  15. Hello to the people out there, it was nice reading the spicy & crispy comments from you all. Let me share a bit of my knowledge. I am working with a company like of Chusman in Retail leasing for all over north India and am looking after the khan market too, This is realy true that the rentals are that very high as i have negotiated in this regards a many times. But mee too is very much surpriced how people can give that much rent. rest i wolud let you know latter on. Thank you.

  16. I wonder Why many shops/chains in Khan Market including Khan Chacha and the McDonalds; don’t accept cards. Insights ?

  17. Excellent work done in researching . Thanks for the info. Khan market is really a wonderful place in Delhi.

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