In 2022, the top seven cities added 2.6 million square feet (msf) of mall space, a 27 percent increase over the previous year, according to a report by real estate consultant ANAROCK states. However, Bengaluru and Hyderabad were the only cities with supply additions in 2022.
Over the next four-five years, nearly 25 msf of mall space is expected to be added. NCR and Hyderabad account for 46 percent of the upcoming supply, followed by Bengaluru with 19 percent, the report, India Retail Real Estate: Revived, Reshaped, & Reinforced, said.
The top cities now have over 51 msf of mall stock across the country with NCR, MMR, and Bengaluru accounting for 62 percent of the total stock.
“Further, the retail market size is expected to touch $2 trillion by 2032, growing from $690 billion in 2021, facilitating the organised retail sector to grow at 25 percent CAGR," Anuj Kejriwal, CEO and Managing Director at ANAROCK Retail, said.
"Sales value estimated during the festive season in late 2022 was Rs 2.5 lakh crore, nearly 2.5 times compared to the previous year. The revival of consumer sentiments and penchant for consumption is therefore being promptly acted upon by the majority of brands, retailers, and mall developers," he said.
Rents and lease
According to the report, 25 msf of mall supply is currently under construction in Tier I cities and will be completed by 2026.
The average rent is Rs 260 per square feet per month. In terms of average rentals in malls, it appreciated by nearly 15 percent in 2022 over the previous year, thus reaching higher than the pre-pandemic levels.
The report found that for all the cities, rentals moved northward as demand for mall space increased significantly. Bengaluru registered the highest uptick in rentals, around 27 percent, followed by Kolkata at 20 percent in 2022 over the previous year.
Rentals increased by 9 percent in Mumbai Metropolitan Region (MMR) during 2022 over the previous year – the lowest hike among the Tier-I cities.
Leasing less than 2,000 square feet continued to dominate across Tier-I cities, with a 59 percent share in 2022, down from 64 percent n 2021.
The share of transactions sized between 2,000 sq ft and 5,000 sq ft increased from 24 percent in 2021 to 28 percent in 2022.
The share of entertainment in absorption increased from 2 percent in 2021 to 28 percent in 2022, while apparel, entertainment, and F&B together accounted for 70 percent of the total absorption in 2022.
Outlook
The share of organised retail has doubled from 9 percent in FY19 to 18 percent at a CAGR of 20 percent. The online retail market in India is about 25 percent of the total organised retail market, likely to be over 37 percent by 2030.
As per industry estimates, the e-retail market is anticipated to reach USD 120-140 billion by FY26, increasing by 25-30 percent annually over the next five years.
The sales volume of the organised retail segment in FY22 was estimated to be $52 billion and is estimated to grow to $136 billion by 2028 with a CAGR of 17 percent.
A high degree of integration of physical and digital is taking place to provide an interactive and all-inclusive experience.
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