In India’s ongoing golden era of retail expansion, consumer demand and retail real estate supply are on an unprecedented growth trajectory. Rising consumption is driving a surge in new mall supply in Tier 1 over the next two years.
The current retail boom is not limited to urban metros - Tier 2 and Tier 3 cities have emerged as the new consumption hotbeds, thanks to rising disposable incomes and deeper smartphone and internet penetration.
Ecommerce adoption in these cities has outpaced that of Tier-1 cities. Industry estimates peg the share of overall online shopping pie at 65% and predict it to reach 64% by FY 2030. The number of Indian online shoppers has jumped up from 140 Mn in 2020 to nearly 260 Mn in 2024; it is projected to nearly double to 300 Mn by 2030, and to 700 Mn by 2035.
Anarock Research estimates that over 16.6 Mn sq. ft. of new Grade A mall supply will enter the top 7 cities over 2025 and 2026. Among metros, with a combined 65% share of the retail real estate supply, Hyderabad and Delhi-NCR will command the lion's share, underscoring the shift of focus to high-growth consumption hubs. 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.
ANAROCK data pegs total mall leasing over the next two years at >12.6 Mn sq. ft. across the top 7 cities. Both mall developers and retailers are showing resolute confidence, spurred by strong leasing and positive consumer sentiments.
Data also indicates that with demand-supply imbalance of previous years now gradually normalizing, mall vacancy rates in top 7 cities will stabilize over the next two years - at 8.2% in 2025 and 8.5% in 2026. In 2021, the vacancy rate in these cities was as high as 15.5%.
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