As shopping malls across the US and other Western economies grapple with declining footfalls, store closures, and forced repurposing, India is emerging as a rare global outlier—witnessing a powerful retail resurgence backed by rising consumption, extreme undersupply of quality mall space, and growing institutional investor confidence.
According to ANAROCK Research, India’s retail real estate sector is set to attract over USD 3.5 billion in capital inflows over the next three years, even as the US records a net closure of nearly 1,200 mall stores since 2020, underscoring the sharply diverging trajectories of global retail markets.
Global Capital Shifts East as Western Malls Face Existential Crisis
Despite a 78% increase in new mall store openings in the US over the past two years, closures continue to outpace additions, forcing nearly 40% of vacant malls to be rezoned or repurposed into non-retail uses such as logistics, residential, or healthcare.
In contrast, India’s retail story is being driven by structural demand fundamentals—young demographics, rising disposable incomes, rapid urbanisation, and limited organised retail penetration.
“Latest ANAROCK data shows that in the next three years, Indian malls are set to see over USD 3.5 billion of capital inflows,” says Anuj Kejriwal, CEO – Retail Leasing and Industrial & Logistics, ANAROCK Group. “More than 88 foreign brands have entered India between 2021 and 9M 2025, with several more actively scouting for space in Grade-A malls, where availability is severely constrained.”
Severe Undersupply of Grade-A Retail Space
One of the strongest drivers of investor and occupier confidence is India’s stark undersupply of organised retail infrastructure.
India’s per capita retail stock remains among the lowest globally:
- Tier I cities: 4–6 sq. ft. per person
- Tier II & III cities: 2–3 sq. ft. per person
- Grade-A mall space: barely 0.6 sq. ft. per capita
By comparison, the US averages nearly 23 sq. ft. per capita, while China exceeds 6 sq. ft.
This imbalance has resulted in near-full occupancy across quality malls, with 95–100% leased space, long tenant waitlists, and rental growth surpassing pre-pandemic levels.
“India’s demand–supply mismatch in Grade-A retail is virtually unheard of in global markets,” Kejriwal notes. “Leasing cycles are now outpacing construction cycles—something rarely seen even in mature retail economies.”
Consumption Shifts Towards Experience-Led Malls
India’s consumption engine continues to accelerate, with the country projected to become a USD 6 trillion consumption economy by 2030. Unlike Western malls that struggle with online cannibalisation, Indian malls have evolved into lifestyle and social hubs.
Entertainment and F&B now contribute 30–35% of total mall footfalls, helping insulate physical retail from e-commerce disruption. Major malls regularly record 20,000+ weekday footfalls, which spike beyond 40,000 on weekends, reinforcing their relevance in an increasingly digital economy.
Investor Appetite Sharpens as Retail REITs Gain Traction
India currently has over 600 operational malls, but fewer than 100 meet institutional-grade benchmarks, intensifying competition among global investors for top-tier assets.
The successful listing of Blackstone-backed Nexus Select Trust REIT in 2023, housing 19 malls with over 1,000 brands and generating INR 1,600 crore in annual NOI, marked a turning point for retail real estate in India.
“This listing established Indian retail as a transparent, scalable, and professionally managed asset class,” Kejriwal says. “By 2030, at least two more retail-focused REITs are expected to enter the market.”
E-commerce Complements, Not Cannibalises
Unlike Western markets, India’s retail ecosystem has not been undermined by e-commerce. Online penetration remains at around 8%, significantly lower than the 20%+ levels in the US and China.
Brands are increasingly adopting a ‘phygital’ strategy, using physical stores as experience and trust-building hubs while leveraging digital channels for scale. Several D2C brands report 2–3x higher conversion rates offline, reinforcing the resilience of brick-and-mortar retail.
Superior Returns Cement India’s Global Appeal
Indian Grade-A malls typically deliver 14–18% internal rates of return (IRRs)—nearly double the yields available in many Western retail markets. Stable rental escalations, revenue-sharing models linked to consumption growth, and consistently low vacancy levels make India a compelling destination for long-term capital.
“In the US and Europe, malls are battling oversupply, declining footfalls, and repurposing pressures,” Kejriwal concludes. “India, on the other hand, offers rising incomes, limited quality supply, strong leasing momentum, and expanding brand demand—making it one of the most attractive retail investment markets globally.”
