- 16.6 mn sft of Grade A mall space is scheduled for completion in 2025 & 2026 across the top 7 cities: Hyderabad & Delhi NCR to have the lion’s share (approx. 65%).
- With previous years’ demand-supply imbalance gradually normalising, mall vacancy rates to stabilise at 8.2% and 8.5% in 2025 & 2026 respectively; vacancy peaked at 15.5% in 2021.
- Total mall leasing pegged at >12.6 mn sft across the top 7 cities over the next 2 years.
- High aspirational demand prompts entry of 60+ global fashion, electronics, lifestyle, & F&B brands in the last 4 years, boosting demand for organised spaces in high-footfall malls & high streets.
- Retail boom transcends metros – Tier 2 and 3 cities becoming consumption hotbeds with ecommerce, outpacing Tier 1 cities with ~56% online shopping share in FY 2024, may touch 64% in FY 2030.
Anuj Kejriwal, CEO and MD, ANAROCK Retail, informs that new mall supply is pegged at 16.6 million sft across top 7 cities in 2025-26. In India’s ongoing golden era of retail expansion, consumer demand and retail real estate supply are on an unprecedented growth trajectory. Rising consumption is driving a surge in new mall supply in Tier 1 cities. ANAROCK Research estimates that over 16.6 million sft of new Grade A mall supply will enter the top seven cities during 2025 and 2026.
With a combined 65 per cent share of this supply, Hyderabad and Delhi-NCR will command the lion’s share, underscoring the shift in focus to high-growth consumption hubs. This surge is part of a broader pipeline that could add more than 40 million sft of retail space by 2029 across major urban centres.
The surge is also prompted by a perceivable shortfall in new supply of Grade A malls across cities. The previous three-year data trends show that new mall supply in the top seven cities did not match the overall leasing. In 2022, these cities witnessed approximately 2.6 million sft of new Grade A retail supply, while leasing clocked in at approximately 3.2 million sft. Likewise, 2023 saw 5.3 million sft of new Grade A mall supply, while 6.5 million sft were leased.
The demand-supply gap widened further in 2024 due to slow approvals, because of general and state elections. New Grade A mall supply in 20204 was just 1.1 million sft, while leasing was 6.5 million sft.
While the estimated new supply, to some extent, raises the spectre of potential oversupply, current absorption trends are reassuring. ANAROCK data pegs mall leasing over the next two years at >12.6 million sft across the top seven cities. Both mall developers and retailers appear confident, spurred by strong leasing and positive consumer sentiments.
The strong leasing rate is also prompted by the entry of over 60 international retail brands in India over the last four years across categories like fashion, electronics, lifestyle, and F&B. This has accelerated demand for high-grade organised retail spaces, particularly in high-footfall zones like malls and high streets.
Data also indicates that with demand-supply imbalance of previous years gradually normalising, mall vacancy rates in top seven cities will stabilise over the next two years at 8.2 per cent in 2025 and 8.5 per cent in 2026. In 2021, the vacancy rate in these cities was as high as 15.5 per cent.
Insatiable Thirst for Consumption
The current retail boom is not limited to urban metros; Tier 2 and 3 cities have emerged as the new consumption hotbeds, thanks to rising disposable incomes and deeper smartphone and internet penetration.
E-commerce adoption in these cities has outpaced that of Tier-1 cities; industry estimates peg the share of overall online shopping in Tier 2 and 3 at 65 per cent and predict it to reach 64 per cent by FY 2030.
The number of Indian online shoppers has jumped from 140 million in 2020 to nearly 260 million in 2024; it is projected to almost double to 300 million by 2030, and 700 million by 2035.