India’s retail real estate sector has kicked off 2026 on a strong note, with leasing activity reaching 3.1 million sq. ft. in the first quarter, reinforcing sustained demand despite limited new supply, according to a report by JLL.
While leasing activity saw a 15% quarter-on-quarter dip, it still recorded a marginal 1% year-on-year growth, reflecting resilience in retailer demand. The strong demand environment led to a decline in mall vacancy rates to 11.9%, down from 12.3% in the previous quarter.
A key highlight of the quarter was the dominance of metro cities. Mumbai led leasing activity with a 26% share, followed by Bengaluru and Delhi NCR at 21% each. Together, these three markets accounted for 68% of total leasing across the country, underlining continued retailer preference for high-consumption urban hubs.
Supply constraints played a major role in reshaping leasing patterns. With only 0.25 million sq. ft. of new mall space added during the quarter, retailers increasingly turned to high streets, which accounted for 48% of leasing activity. Shopping malls followed with a 40% share, despite limited availability of new Grade A retail space.
On the occupier front, domestic retailers remained the primary drivers, contributing 79% of total leasing volume. Direct-to-consumer (D2C) brands maintained a steady 7% share, continuing their transition from online to offline formats. Meanwhile, international retailers posted a strong 48% year-on-year growth in leasing, driven by aggressive expansion strategies targeting India’s growing consumer base.
In terms of categories, fashion and apparel continued to dominate, while the entertainment segment emerged as the second-largest contributor with a 16% share. Cinema operators accounted for a significant 71% of entertainment-led leasing, reflecting expansion of next-generation multiplex formats. Food and beverage followed closely with a 15% share.
Looking ahead, the sector is poised for significant expansion. A robust development pipeline of 46.1 million sq. ft. is expected to be delivered across the top seven cities between 2026 and 2030. This upcoming supply is anticipated to ease current constraints, support retailer expansion, and further compress vacancy levels.
The report highlights that India’s retail real estate market is entering a new growth phase, driven by rising consumption, increasing demand for organized retail, and evolving retailer strategies that balance high streets and malls. With institutional-grade supply set to expand over the next few years, the sector is well-positioned for sustained growth and increased investor interest.
