3.1 Million Square Feet Added to India’s Retail Mall Portfolio in Q4 2023, Surpasses Pre-Pandemic Levels

Cushman & Wakefield, one of the largest and the fastest growing real estate services firm in India unveiled its Q4-2023 Retail Marketbeat Report, encapsulating the key highlights of the Retail segment in Q4 2023. According to the report, Q4 records addition of 3.1 million square feet predominantly Grade A malls, with Bangalore and Hyderabad leading the charge with 1.2 MSF and 1.02 MSF of supply, respectively. Additionally, with 5.9 MSF of mall supply commencing operations across top-8 cities in India, year 2023 saw the biggest supply addition in the post-Covid world. In 2019, the same cities had witnessed new supply addition of ~5.0 MSF of Grade-A and B+ malls. 

Pre Covid vs Post Covid Impact: Emergence of Grade A Malls 

In the previous three years (2020-22), annual average footprint of malls that were operational stood below 3.0 MSF, as developers shied away from this asset class that was worst hit due to the pandemic. Post-Covid, however, with shoppers coming back to fulfil their aspirational consumption, retailers experienced a dearth of good quality retailing space as most Grade-A malls experienced tight vacancies. Experiential retailing became the most preferred format for retailers looking for space, resulting in superior category malls witnessing lower single digit vacancies. 

Mainstreets Rentals Reach Pre-Covid Levels 

Prominent mainstreets rentals, which witnessed a rise over the last 4-6 quarters, continues to experience upward pressure across most markets. Overall, the retail space leasing volume across most of the top-8 cities were led by mainstreets, indicating the dearth of space in Grade A malls. As a result, highstreets such as Khan Market, Linking Rd., Galleria market, Banjara Hills, Adyar and many others saw rents nearing or even breaching the pre-Covid rents sometime earlier in the year 2023. 

Rental Growth across Prominent Mainstreets 

Speaking of the developments, Saurabh Shatdal, Managing Director, Capital Markets and Head of Retail, India, said – “Q4 2023 has been a monumental quarter for India’s Retail Segment. Not only has the retail sector marked a complete post-pandemic comeback, but it has also laid down a robust foundation for its sustained growth across categories like malls and main streets. With a surge in supply of new malls in Q4, the total mall supply across top 8 cities in 2023 surpassed the highs of 2019 by a nearly million sf. This reflects the strong interest from retailers in entering or expanding into the Indian market, fueled by evolving consumer preferences, shifting consumption patterns and a supportive business environment. We expect this momentum to continue with 2024 poised to be another strong year that will not only further boost the pipeline of physical retail supply but also foster overall economic growth through these commercialization activities.”  

For Ref – Snapshots of Rental Growth across some of the Prominent Mainstreets in Top 8 cities 

*Asking rent (INR/SF/month) on the carpet area of ground floor Vanilla stores is quoted 

Also Read: 25 Mn sq. ft. Mall Space to be Added in Top 7 Cities in Next 4-5 Years