India's Retail Real Estate Market Sees Growth in Q2 2024
Main street retail leasing continues to dominate, with mall vacancy rates declining across major cities
Retail Real EstateIndiaMall Vacancy RatesMain Street Retail LeasingCushman WakefieldReal Estate MumbaiJul 09, 2024
Retailers are increasingly focusing on main streets in prominent locations across India, with emerging clusters forming around residential and commercial hubs. This trend is reflecting in leasing activity, with high street leases accounting for 70% of total leases in Q2 2024, compared to 30% for mall leases.
The rental growth across prominent main streets in Q2 2024 further underscores their growing appeal. Kolkata, Bangalore, Hyderabad, and Mumbai have all experienced significant year-on-year rental increases, demonstrating strong demand and potential for high street retail in the country.
A notable decline in mall vacancy rates has been observed across Delhi NCR, Bengaluru, Pune, and Ahmedabad during the second quarter. This trend is attributed to the lack of new mall openings and the robust demand for high-quality retail spaces, thereby contributing to a demand-supply imbalance to some extent.
Superior Grade A/A+ category malls continue to maintain very low vacancy rates (typically in the single digits) across major cities. In terms of supply, while the first half of 2024 saw no new mall supply enter the market, the second half is anticipated to witness a surge in retail space, with an addition of approximately 4.5 million square feet of primarily Grade-A malls.
The tightness in the superior grade retail real estate space can also be seen in the retail portfolio of NEXUS Select REIT, where occupancies have reached ~98%. The REIT's stock prices have climbed nearly 30% since its IPO in May 2023, and looking at the under-penetration, it has announced a near doubling of portfolio size over the next 5 years.
Saurabh Shatdal, Head Retail and Managing Director, Capital Markets, Cushman & Wakefield, said, \
Frequently Asked Questions
What is the current trend in India's retail real estate market?
The current trend in India's retail real estate market is the dominance of main street retail leasing, with a strong demand for high-quality retail spaces.
What is the reason for the decline in mall vacancy rates across major cities?
The decline in mall vacancy rates is attributed to the lack of new mall openings and the robust demand for high-quality retail spaces, thereby contributing to a demand-supply imbalance to some extent.
What is the expected supply of retail space in the second half of 2024?
The second half of 2024 is anticipated to witness a surge in retail space, with an addition of approximately 4.5 million square feet of primarily Grade-A malls.
Which cities have experienced significant year-on-year rental increases in Q2 2024?
Kolkata, Bangalore, Hyderabad, and Mumbai have all experienced significant year-on-year rental increases in Q2 2024.
What is the current occupancy rate of NEXUS Select REIT's retail portfolio?
The current occupancy rate of NEXUS Select REIT's retail portfolio is ~98%.
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