The first half of the year, however, saw limited supply of quality real estate in the top-tier malls in the country’s top seven cities, with incremental supply of 0.2 million square feet during the period. This supply is expected to increase over the coming quarters. 

Meanwhile, gross leasing stood at 2.8 million square feet, according to the report.

As a result, vacancy rates at malls stood at 6% in the first half of the year. This marks a significant recovery from the 13% vacancy rate experienced in 2020, signaling robust demand for retail real estate in the country. 

India has 88 ‘Grade-A’ malls. Vacancy levels have declined sharply post-pandemic due to robust leasing on the back of aggressive expansion plans of retailers, coupled with limited availability of quality retail spaces, according to the report. Vacancy rate is the percentage of vacant space in a given mall. 

“The leasing activity for the period has surpassed previous year levels and is expected to post the best-ever numbers, post-pandemic, for the entire year. Currently, the sector is facing challenges such as a shortage of quality retail real estate, which has led to an escalation in rentals. However, thanks to the strong pipeline of upcoming retail assets by organized mall operators, this challenge should subside in the near future,” said Anuj Kejriwal, CEO & MD, Anarock Retail.

After seeing a jump in the previous calendar year, rentals, however, remained largely unchanged in certain markets. Rentals in the first half of the calendar year remained the same in Mumbai, Delhi-NCR, Pune, Hyderabad, and Chennai when compared to the same period a year ago, but declined 5-10% year-on-year in Kolkata and Bengaluru, according to the report released Wednesday.

Leasing activity in the first half of the year was led by apparel and accessories retailers, followed by entertainment and food and beverage companies.

“The sharp fall in vacancy levels to 6%, from the highs of 13% during the peak of the pandemic, proves the strong revival of the sector, thanks to the robust growing demand across all categories. On the ground, we see immense enthusiasm from both mall operators and retailers alike to strengthen their presence in the current markets and foray into newer cities. Clearly, the retail story has now grown to tier-2 & tier-3 cities, thanks to the realignment in workforce location, accompanied by strong demand and improved internet penetration,” Kejriwal said.

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Updated: 15 Nov 2023, 07:11 PM IST