Could India See a Retail Boom with 16.6 Million Sq Ft of New Mall Space by 2025-26?

Mumbai, May 13 (NationPress) The retail landscape in India is undergoing a significant transformation, with an anticipated addition of over 16.6 million square feet of new Grade A mall space across the top seven cities by 2025 and 2026, according to a recent report.

This surge is fueled by escalating consumer demand and robust retail leasing activity, marking what experts refer to as a golden era for the sector, as per data compiled by Anarock Research.

Hyderabad and Delhi-NCR are set to spearhead this supply boom, contributing to nearly 65 percent of the forthcoming mall space.

This trend highlights a distinct shift towards thriving consumption hubs in these areas.

The expansion is part of a larger retail real estate pipeline that could see more than 40 million square feet of new retail space introduced throughout India by 2029.

Anuj Kejriwal, CEO and MD of Anarock Retail, stated that the momentum for increased mall development is also a response to a scarcity of quality supply in recent years.

“In 2022, major cities witnessed only 2.6 million sq. ft. of new supply, while leasing reached 3.2 million sq. ft. In 2023, the new supply increased to 5.3 million sq. ft., yet leasing outpaced it at 6.5 million sq. ft.,” he explained.

The supply deficit became particularly evident in 2024, partly due to slower approval processes associated with general and state elections.

“During that year, merely 1.1 million sq. ft. of new mall space was introduced to the market, while leasing demand remained robust at 6.5 million sq. ft.,” Kejriwal noted.

Despite the influx of new space expected in the coming two years, there is no immediate concern regarding oversupply.

The report predicts that over 12.6 million sq. ft. of mall leasing activity will occur across the top cities in 2025 and 2026.

This indicates a strong interest from both developers and retailers, supported by positive consumer sentiment and a continued demand for organized retail space.

A significant factor driving this demand is the entry of over 60 international retail brands into India over the past four years.

These brands, representing categories such as fashion, electronics, lifestyle, and food and beverages, are actively seeking to establish a presence in high-traffic malls and bustling high streets.

Consequently, mall vacancy rates, which peaked at 15.5 percent in 2021, are projected to stabilize at approximately 8.2 percent in 2025 and 8.5 percent in 2026, according to the report.

The current wave of retail growth is also extending beyond major metropolitan areas. Tier 2 and Tier 3 cities are emerging as vital retail destinations due to increasing disposable incomes, improved internet connectivity, and a surge in e-commerce adoption.

In fact, these smaller cities now account for a significant portion of online shopping in India.

The number of online shoppers in the country has escalated from 140 million in 2020 to nearly 260 million in 2024, and is projected to reach 300 million by 2030 and 700 million by 2035, as stated in the report.