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Developers bet on luxury malls in smaller cities as demand surges

Consumers here are well-travelled, digitally exposed, and aspirational, making them ready for luxury and premium retail.

Bengaluru / August 21, 2025 / 12:36 IST
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Developers bet on luxury malls in smaller cities as demand surges

Real estate developers are designing malls in India’s Tier 2 and smaller cities with luxury zones, valet parking, and experiential spaces, as rising incomes and aspirational spending fuel the spread of premium retail beyond metros.

“Premiumisation in Tier 2 and 3 cities is no longer a future possibility—it’s current reality. Consumers here are well-travelled, digitally exposed, and aspirational, making them ready for luxury and premium retail,” said Kamakshi Mantri, Chief Strategy Officer, Mantri Malls.

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Mantri explained that Mantri Malls’ expansion and redevelopment plans are focusing on cities with growing middle-class populations, better infrastructure, and strong connectivity. “Instead of replicating metro models, we adapt our retail formats to local consumer tastes while ensuring aesthetics, brand curation, and hospitality rival the best urban malls,” she said.

The company sees significant potential in cities such as Lucknow, Jaipur, Indore, Kochi, Bhopal, Coimbatore, Surat, Bhubaneswar, and Vizag. Growth in digital payments, modern retail habits, luxury housing, car ownership, and urban renewal projects are all shaping these investment decisions.