Commercial Real Estate Boom Over? Why Are Indians Not Investing In Shops In Malls?

India’s mall vacancy levels dropped to 8.3% in H1 2024, the lowest in six years, according to the ANAROCK Retail RELEAP report. This marks a significant decline from the peak of 15.5% in 2021, driven by robust leasing demand and limited supply. Superior malls across major cities are now operating at almost full capacity.

Anuj Kejriwal, CEO & MD – Retail, Industrial & Logistics – ANAROCK Group, noted, “Vacancy in prominent malls continues to be on the decline owing to limited supply and robust leasing. Superior malls across the country are operating at almost full capacity. Major national and global brands are keen to take up quality spaces in successful malls and high streets across cities.”

3.1 Million Sq. Ft. Leased in H1 2024
The first half of 2024 saw over 3.1 million sq. ft. of retail space leased across major cities, continuing the leasing momentum from the past two years. Demand has now outpaced supply for the third consecutive year, with retailers and brands opting for smaller spaces. Nearly 70% of leases were for spaces measuring up to 2,500 sq. ft.
Segments like Apparel & Accessories and Food & Beverages dominated the leasing activity, while the watches and jewellery category grew significantly, accounting for 6% of the overall leased space.

Upcoming Supply Concentrated in Key Cities
The next four to five years will witness significant retail supply additions, with the NCR, MMR (Mumbai Metropolitan Region), and Hyderabad collectively accounting for over 85% of the planned supply. These regions are set to drive the sector's expansion further as demand for high-quality retail spaces remains strong.

Kejriwal added, “As fresh supply gets added in the coming years, larger spaces will garner an increasing share of total leased area.”

Rising Rentals on High Streets
Rental values in high streets are also on the rise and are expected to continue climbing until new supply comes online. With robust demand and limited quality spaces, the retail sector’s growth trajectory appears firmly established.