Mumbai, May 13 India's retail sector is witnessing a major transformation, with over 16.6 million square feet of new Grade A mall space expected to come up across top seven cities in 2025 and 2026, a new report said on Tuesday.
This surge is being driven by rising consumer demand and strong momentum in retail leasing, marking what experts call a golden era for the sector, according to data compiled by Anarock Research.
Hyderabad and Delhi-NCR will lead this supply boom, accounting for nearly 65 per cent of the upcoming mall space.
This indicates a clear shift towards high-growth consumption centres in these cities.
The expansion is part of a broader retail real estate pipeline that could see more than 40 million square feet of new retail space added across India by 2029.
Anuj Kejriwal, CEO and MD of Anarock Retail, said that the push for more mall development is also due to a shortage of quality supply in recent years.
“In 2022, top cities saw only 2.6 million sq. ft. of new supply, while leasing hit 3.2 million sq. ft. Similarly, in 2023, new supply was 5.3 million sq. ft., but leasing was even higher at 6.5 million sq. ft.,” he said.
The supply shortfall became more pronounced in 2024, partly due to slower approval processes linked to general and state elections.
“In that year, only 1.1 million sq. ft. of new mall space entered the market, while leasing demand remained steady at 6.5 million sq. ft,” Kejriwal mentioned.
Despite the sudden influx of new space expected over the next two years, there are no immediate fears of oversupply.
The report estimates over 12.6 million sq. ft. of mall leasing activity will take place across the top cities in 2025 and 2026.
This reflects strong interest from both developers and retailers, buoyed by positive consumer sentiment and ongoing demand for organised retail space.
One of the driving factors behind this demand is the entry of over 60 international retail brands into India in the last four years.
These brands span fashion, electronics, lifestyle, and food and beverage categories, and they are actively seeking presence in high-footfall malls and high streets.
As a result, mall vacancy rates, which peaked at 15.5 per cent in 2021, are expected to stabilise at around 8.2 per cent in 2025 and 8.5 per cent in 2026, said the report.
The current retail growth wave is also spreading beyond major metro cities. Tier 2 and Tier 3 cities are becoming important retail destinations due to rising disposable incomes, better internet access, and growing ecommerce adoption.
In fact, these smaller cities now account for a majority share of online shopping in India.
The number of online shoppers in the country has grown from 140 million in 2020 to nearly 260 million in 2024 and is expected to hit 300 million by 2030 and 700 million by 2035, the report said.
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