Retail sector leasing is expected to rise by 17-28 percent to touch 5.5-6 million square feet (msf) in 2023, the highest after the 6.8 msf of 2019, according to a report by a real estate consultant.
The CBRE report titled "2023 India Market Outlook" also projected that the gross retail supply would touch about 6 msf in 2023, the highest in the past five years.
"It is expected that primary leasing in newly-completed malls will remain the key driver of retail space demand in 2023," the report added.
The supply situation is expected to improve because several investment-grade projects launched by developers in the previous 1.5 to 2 years are also anticipated to become operational in 2023, the report said.
Additionally, a sizeable amount of pent-up supply is scheduled to be completed during 2023.
The report further highlights that Indian consumers have remained optimistic about their personal finances, especially compared to other economies.
"This was reflected in CBRE India’s Live-Work-Shop consumer sentiments survey conducted in late 2022, wherein 77 percent of respondents revealed their confidence about their personal finances," the report added.
"We believe that any impact of an expected slowdown on economic activity will be circumvented by strong macroeconomic fundamentals and domestic consumption. The government’s strong capex programme, with a focus on infrastructure development and capacity building across sectors, is aimed at driving investment," Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said.
As the second-largest employment generator in India, the real estate sector will continue to be a focus area for these investments, he added.
Further projections
The report added that the rising urban population, increase in per capita income, supply chain revamp after the pandemic and successful brand launches in tier-II, III and IV markets have led retailers and prominent developers alike to explore emerging untapped markets.
India’s transition into an organised retail market would be driven by the continued growth in these cities.
Additionally, green real estate will see a boost with the developers not only promoting sustainable initiatives (recycling, waste management, etc.) across their assets, but also sustainable brands.
Retailers will continue to carve out success in diverse locations, with several international brands in the food and beverage (F&B) and apparel segments opening stores along expressways or highways.
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