India Retail Market Dynamics Q1 2025

India’s retail sector continued to demonstrate impressive performance in terms of both demand and supply in the first quarter of calendar year 2025. While demand for retail spaces continued unabated across the top 7* cities, the infusion of new retail spaces also totalled to a new high. During Q1 2025, 3.1 million sq. ft was leased by retailers in shopping malls and high streets across India’s top 7 cities according to JLL India. On the supply front, Q1 2025 witnessed new retail space additions of 2 million sq. ft.

Retail leasing activity witnessed a significant year-on-year (YoY) growth of 169% as strong momentum in new retail store openings continued to play out in major metropolitan cities. On a quarter-on-quarter (QoQ) basis, gross leasing activity in the retail sector noted an uptrend of 9%. In terms of geographic spread of leasing volume, Bengaluru and Hyderabad together accounted for 60% of the overall India leasing activity. Prominent high streets across both these cities witnessed vibrant leasing in suburban micro-markets with larger store size requirements coming from retailer categories such as daily needs and grocery, food and beverages and fashion and apparel.

Amongst retailer categories, fashion and apparel continued to remain the frontrunner in India’s retail landscape. The segment accounted for a significant 31% share of the leasing activity in Q1 2025. Retailers in the food & beverage segment comprised 21% share of the leasing pie followed by entertainment at 16%. During the quarter, domestic retailers continued to lead retail space take-up with an 86% share. With growing proliferation of direct to consumer (D2C) brands in the offline space and expansion by domestic fashion anchors, the share of domestic retailers in the gross leasing activity has been rising steadily. This quarter also saw 8 new brands of international origin open their first retail store in the country.

India’s retail sector has been through its share of hiccups in terms of new supply infusion recently. 2024 was fraught with supply constraints as quality mall projects under construction had development pipelines spanning across the next 3-5 years. As a result, 2024’s new mall supply declined by 73% over 2023. Q1 2025 started on a positive note in terms of new supply. During Q1 2025, five new shopping malls admeasuring 2 million sq. ft. became operational. This quarter’s new retail supply has already outpaced the overall annual supply of the calendar year 2024. With the addition of this new supply, the organized retail stock across the top 7 cities reached 88.5 million sq. ft at the end of Q1 2025.

Over the next three quarters (April-December 2025), 7 million sq. ft. of new Grade A supply of shopping malls is expected as per the current delivery timelines. With this upcoming new supply, the retail sector’s leasing is expected to remain healthy on the back of demand expansion from retailers due to availability of quality spaces in prime micro-markets in key Indian cities. By year-end 2025, we expect gross leasing in the sector to touch the 10 million sq. ft mark easily.

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