Strong Comeback, India To Get 31 Malls By End Of Next Year
The Retail real estate is staging a strong comeback with as many as 15 new malls in 2022 spread across 12 cities in the country with nearly 10.5 mn sq. ft in Tier 1, 2 and 3 citites, Anarock Retail said in a report. According to the report, another 7.25 mn sq ft with 16 new malls will come up in 2023. In 2022, new mall supply will be almost twice that of 2021.
As many as 15 new malls will enter the market in 2022 spread across 12 cities in the country. Chennai will see the highest supply of four new malls this year spread over an area of 2.55 mn sq ft. Other tier 1 cities with new mall supply include Ahmedabad, Bangalore, Hyderabad, Mumbai, Pune and Ghaziabad in NCR spanning 5.10 mn sq ft area. Tier 2 and 3 cities include Baroda, Budaun, Indore, Nagpur and Udaipur with total area of approx. 2.50 mn sq ft.
COVID-19 severely impacted the general economy - and retail in particular - in 2020. Brick-and-mortar retail stores in malls and high streets were hit hard, and a quick recovery seemed improbable.
“In the course of two severe waves that saw massive restrictions forced on malls, operators had to rethink their business plans and strategies,” says Pankaj Renjhen, COO and Joint MD, Anarock Retail. "However, the massive nationwide vaccination drive resulted in a much milder third wave at the beginning of 2022 and the withdrawal of restrictions allowed economic activities to restart. This has fuelled new growth in the retail sector," Renjhen added.
As consumers return to more normal shopping and socialising patterns and populate malls again, India’s retail real estate market is responding to significantly improved footfalls. Malls are again witnessing high occupancy levels, and the requirement for more organised retail space is pronounced.
Going by the high leasing volumes by occupiers across categories and the momentum witnessed in the Tier II and III cities, mall developers are finishing their projects and rapidly adding new inventory.
“While 2020 was a washout year with new mall supply of just 2.1 million sq ft in tier I cities, it nearly doubled to 4.01 million sq ft in 2021,” says Pankaj Renjhen adding that the performance of most malls in key consumption centres has either surpassed pre-pandemic levels in February 2020 or inched closer to those thresholds.
Tier II and III cities are witnessing rapid mall penetration. The supply in these cities in the current year is close to 2.5 million sq ft, recording a yearly growth of 91 per cent. The cities include Baroda, Budaun, Indore, Nagpur and Udaipur.
These cities have seen considerable growth in disposable income, mobile internet penetration, and support infrastructure. Consumers in tier II and Tier III cities now show an apparent propensity for branded products, which sets the stage for accelerated growth of organised retail across the country.
The pandemic-infused e-commerce boom cannot be wished away and continues to be patronised by some segments of society. However, the upcoming supply of mall spaces - clearly in response to increased demand - proves that physical retail remains the dominant force in India.
COVID-19 led to significant advancements, technological adaption, and a fresh burst of innovations in the retail sector as retailers respond to evolving consumer requirements. The result is omnichannel retail, which offers a new balance between convenience and experiential shopping - and has also boosted the demand for offline premises.