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Over 16.6 msf of new malls to come up in Tier-1 cities in 2 yrs: Report

Driven by rising consumption, over 16.6 million square feet (msf) of new Grade-A malls are expected to come up in Tier-1 cities in 2025-26 calendar years, according to a report by real estate consultancy firm Anarock. Hyderabad and Delhi-national capital region (NCR) will command a combined 65 per cent share of the new malls, indicating a shift of focus for players in this segment to high-growth consumption hubs, it added. This comes after a perceivable shortfall in new supply of Grade-A malls across the top seven cities, including Mumbai Metropolitan Region, Delhi-NCR, Chennai, Pune, Hyderabad, Kolkata, and Bangalore, which was significantly lower than the overall leasing in the last three calendar years. According to data, these cities witnessed 2.6 msf of new Grade-A retail supply, while leasing clocked in around 3.2 msf in 2022. Likewise, 2023 saw 5.3 msf of new Grade-A malls, lower than the 6.5 msf of space leased. The demand-supply gap widened further in 2024 due to approvals slowing down because of general and state elections. 'New Grade-A mall supply in 2024 was just 1.1 msf, while leasing was 6.5 msf,' Anuj Kejriwal, chief executive officer (CEO) and managing director (MD) at Anarock Retail said. The surge now, however, is part of a broader pipeline that could add more than 40 msf of retail space by 2029 across major urban centres. The report adds that current absorption trends are reassuring, putting down concerns of potential oversupply. Anarock data states that the total mall leasing is pegged to be over 12.6 msf across the top seven cities, compared to 16.6 msf of new supply over the next two years. 'Both mall developers and retailers are showing resolute confidence, spurred by strong leasing and positive consumer sentiments,' the report said. Data also indicates that with the demand-supply imbalance of previous years now gradually normalising, mall vacancy rates in top seven cities are expected to 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. The report indicates that the current retail boom is not limited to urban metros, with Tier-2 and -3 cities also emerging as new consumption hotbeds due to rising disposable incomes and deeper smartphone and internet penetration. 'E-commerce adoption in these cities has outpaced that of Tier-1 cities, with industry estimates pegging the share of overall online shopping pie at 65 per cent and predict it to reach 64 per cent by FY30,' the report added. The number of Indian online shoppers has also jumped from 140 million in 2020 to nearly 260 million in 2024. The report stated that it is further projected to nearly double to 300 million by 2030, and to 700 million by 2035.