India's Retail Sector Needs 55 Million Square Feet of Grade-A Mall Space by 2027
Report by Cushman & Wakefield highlights the growing demand for retail space in India, with a need for 55 million square feet of Grade-A mall space by 2027 to meet consumer demand.
Retail SectorGradea Mall SpaceConsumer DemandInternational RetailersHigh StreetsOffice Retail ComplexesReal Estate NewsSep 19, 2024
The country requires around 55 million square feet of Grade-A mall space over the next four years to keep pace with the market and align with other south Asian economies such as Indonesia, Philippines, Thailand, and Vietnam on the basis of Retail Space Per Capita (RSPC).
The report by Cushman & Wakefield notes that the need of the hour is to upgrade the pace of quality retail developments, the delivery of which has been very slow so far. Over the last eight years, India's retail sector has witnessed an average of a mere 2.5 msf of Grade-A mall developments commence operations.
This means, merely 20 msf of Grade-A malls got added in the last eight years, despite consumer demand consistently growing stronger during the same period. The first half of 2024 saw no new mall supply enter the market.
India's total Grade-A mall inventory, currently stands at 61 msf across top 8 cities, translating to a mere 0.5 SF of RSPC, which is much lower even when compared with smaller countries such as Indonesia, the Philippines, and Vietnam.
The report highlights the increasing attractiveness of the Indian market for international retailers, many of whom are planning to enter the market. According to the report, the average number of global brands entering India has surged from a pre-COVID yearly average of 12 to 25 as of 2024, signifying a growing confidence in the country's retail potential.
This influx of international brands is further driving the demand for premium retail spaces and contributing to the overall dynamism of the sector. High Streets and Office Retail Complexes (ORC) are also witnessing sustained growth, providing some relief by offering high visibility and proximity to customers, leading to peak rental premiums in these areas.
There is a significant shift in consumer spending patterns, with a growing emphasis on discretionary items and experiential retail. This trend is evident in recent data, showing an increase in urban India's spending on discretionary items - from 27% in FY2011-12 to about one-third in FY2022-23, while spending on essentials has decreased.
Additionally, monthly spending on food delivery and credit card usage have surged, reflecting higher consumer confidence and discretionary spending. Gradually, Indians are seen spending more on travel, vehicles, and premium consumer durables.
Frequently Asked Questions
How much Grade-A mall space is required in India by 2027?
Around 55 million square feet of Grade-A mall space is required by 2027 to meet growing retail demand.
What is the current state of India's retail sector?
India's retail sector is at a pivotal moment, with rising consumer confidence and increasing discretionary spending.
How many global brands are entering India every year?
The average number of global brands entering India has surged from a pre-COVID yearly average of 12 to 25 as of 2024.
What is driving the demand for premium retail spaces in India?
The influx of international brands is further driving the demand for premium retail spaces and contributing to the overall dynamism of the sector.
What is the trend in consumer spending patterns in India?
There is a significant shift in consumer spending patterns, with a growing emphasis on discretionary items and experiential retail.
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