The leasing of retail real estate space in quality shopping malls and prominent high-streets rose 21 per cent last year across eight major cities at 4.7 million square feet as retailers looked to expand stores, according to property consultant CBRE.
The absorption of retail space in 2021 stood at 3.9 million square feet.
"The Indian retail sector is recovering, and we anticipate that it will continue to gain momentum through 2023...Even amid difficult global economic conditions, international brands are expanding not only in tier-I cities but also penetrating in tier-II & III cities as they see India as a potential market," Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East & Africa at CBRE, said.
As per CBRE data, the leasing of retail space in Ahmedabad rose to 0.10 million square feet last year from 0.03 million square feet in 2021.
In Bengaluru, the absorption of retail space increased to 1.92 million square feet from 1.68 million square feet.
The absorption in Chennai grew to 0.45 million square feet from 0.26 million square feet, while in Delhi-NCR the leasing went up to 0.96 million square feet from 0.36 million square feet.
Pune saw leasing of 0.43 million square feet last year as against 0.19 million square feet in 2021, while Kolkata witnessed an absorption of 0.18 million square feet as against 0.10 million square feet.
However, the leasing of retail space declined in Hyderabad to 0.31 million square feet from 0.64 million square feet in 2021. The absorption of retail space in Mumbai fell to 0.39 million square feet last year from 0.66 million square feet.
The data includes space take-up in investment-grade malls, prominent high-streets and standalone developments.
Ram Chandnani, Managing Director, Advisory and Transactions Services, CBRE India, said, As the cities started to reopen after the pandemic, many shoppers returned to physical retail and since then have adopted hybrid commerce. Sales in July-December 2022 surpassed the pre-pandemic levels owing to increased consumer confidence, leading to a hike in spending." The leasing momentum is expected to further pick up in January-June this year owing to anticipated space take-up in newly completed malls, he added.
Gagan Randev, Executive Director, India Sotheby's International Realty, said, "Retail has bounced back strongly after the Covid turmoil. Coincidentally, a lot of global brands have chosen their India entry at this time and this has augured very well for retail." "The story is not yet over, retail seems to be set for its strong performance and rentals will continue to show their upward trajectory," he added.
India is expected to see 16 new malls opening in tier 1-2 cities in 2023 and a similar number in 2024 and it is a clear expectation of participants that e-commerce and physical shopping will co-exist, Randev said.
CBRE said international brands such as Tim Hortons, Victoria's Secret, and Uniqlo continued to expand during July-December last year despite global headwinds.
As tier II cities continued to gain popularity, Uniqlo opened its first store in Chandigarh, Tim Hortons entered Ludhiana, and Starbucks, Biba, and Shoppers Stop opened in Dehradun.
During the second half of 2022, the American home furnishings shop chain Pottery Barn forayed into Delhi-NCR, opening two stores in rapid succession.
Adidas opened its largest experience store in Delhi-NCR, and Zara, Nike, and Azorte are among the other companies that have launched experience/flagship stores with a wide range of tech and other services in the city.
Some prominent brands expected to launch in India over the next few months include Lavazza and Armani/Caffe from Italy, Jamba from the United States, and The Coffee Club from Australia.
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