The real (e)state of Indian retail sector

India’s retail landscape is a vibrant mélange of formats. Driven by rapid urbanisation, retailing in India has evolved significantly over the past three decades. No longer confined to densely populated bazaars and mom-and-pop stores, modern retail includes organically developed high streets. However, high streets remain largely unorganized due to their fragmented nature. India’s economic reforms in the early 1990s created fertile ground for the growth of an organised retail sector.

At the dawn of the 1990s, mall culture got a foothold in India with the spurt of shopping complexes in Chennai and Delhi. Soon, real estate developers entered the retail play, leading to the widespread construction of shopping malls. By 2010, the top 7 Indian cities* had nearly 31.1 million sq. ft. of operational mall stock. The pace of mall development gained momentum before the global financial crisis, after which many developers were forced to leave the business as they lacked the expertise in operating shopping malls as investible assets and had mounting debt burdens already. However, some superior-quality malls built in prime locations laid the groundwork for future developments. The period between 2011 and 2020 witnessed the infusion of 41.5 million sq. ft. of mall stock. Developers expanded to previously untouched suburban and peripheral areas and experimented with large formats. While the construction of new shopping malls continued over the years, many poorly constructed malls became financially unviable. In early 2020, mall construction suffered due to the COVID-19 outbreak in India. Subsequently, landlords and strata owners of retail assets with high vacancy levels started struggling. Such malls have now either been torn down to monetise the land parcels or have leased spaces to commercial establishments to keep them from shutting down.

Figure 1: Current decade to witness the highest mall supply infusion ever

Source: JLL Research, 2024
Note: *Top 7 Indian cities are Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune

Brick-and-mortar retail bounced back due to positive shopper sentiment, experiential retail and increased consumption across popular categories. Between 2021 to 2024, 14.4 million sq. ft. of supply became operational. There is a strong development pipeline of 46.5 million sq. ft. of proposed and under-construction mall supply to be completed between 2025 and 2030. If this incremental supply of shopping malls becomes operational per the scheduled timelines, this decade may witness nearly 60.9 million sq. ft. of new mall space, representing the largest infusion of real estate for the organised retail sector ever.

The Indian retail sector has been undergoing a significant transformation in the current decade. Growing affluence, aspirational shift and social media influence are driving the trend of “premiumisation”. In the past four years, 60 international brands have entered India, with new entrants nearly doubling from 14 in 2023 to 27 in 2024. Developers have been noticing this trend and augmenting the supply of REIT-able mall spaces steadily. Of the expected mall supply from 2025 to 2030, nearly 43% will be spread across malls sized between 1 million sq ft to 3 million sq ft. of gross leasable area. Moreover, they will largely comprise assets under development by listed real estate developers in the country. In a nutshell, this decade will see a rich supply of superior-quality malls from leading real estate developers, which will redefine the retail landscape in India.