Amid rising consumption, Tier 1 cities are expected to see a sharp increase in new mall supply. According to the latest ANAROCK research, over 16.6 million sq. ft. of new Grade A mall space will be added across the top 7 cities in 2025 and 2026.
Hyderabad and Delhi-NCR will account for 65 per cent share of this supply. This surge is part of a broader pipeline that could add more than 40 million sq. ft. of retail space by 2029 across major urban centres.
Anuj Kejriwal, CEO and MD, of ANAROCK Retail, says, “The surge is also prompted by a perceivable shortfall in new supply of Grade A malls across cities. The previous three-year data trends show that new mall supply in the top 7 cities did not match the overall leasing.”
To put into perspective, in 2022, these cities saw approximately 2.6 million sq. ft. of new Grade A retail supply, while leasing clocked in at approximately 3.2 million sq. ft. 2023 saw 5.3 million sq. ft. of new Grade A mall supply, while 6.5 million sq. ft. were leased.
In 2024, this demand gap widened due to approvals slowing down because of general and state elections.
“New Grade A mall supply in 2024 was just 1.1 million sq. ft., while leasing was 6.5 million sq. ft,” Kejriwal added.
ANAROCK data forecasts that total mall leasing over the next two years at will cross over 12.6 million sq. ft. across the top 7 cities. The strong leasing rate is also fueled by the entry of international retail brands in India across various categories such as fashion, electronics, lifestyle, & F&B.
This is why there’s high demand for high-grade organized retail spaces, particularly in high-footfall zones like malls and high streets.
Data also indicates that with a demand-supply imbalance of previous years now gradually normalizing, mall vacancy rates in the top 7 cities will stabilize over the next two years at 8.2 per cent in 2025 and 8.5 per cent in 2026. In 2021, the vacancy rate in these cities was as high as 15.5 per cent.
Tier 2 and Tier 3 cities have also emerged as consumption hotbeds due to the rise of disposable incomes and digital adoption. Industry estimates peg the share of the overall online shopping pie at 56 per cent and predicts it to reach 64 per cent by FY 2030 within these cities. The number of Indian online shoppers is projected to double to 300 million by 2030.
(With inputs from bl intern Nethra Sailesh)
Published on May 13, 2025