India's Mall Space to Expand Significantly

Driven by Impressive Retail Recovery

India's mall space is set to expand significantly in the next two to three years, thanks to the retail sector's impressive recovery last year. An additional 35 million sq ft of mall space is expected to be added, driven by ongoing investments estimated to surpass Rs 20,000 crore in the next four years.

Key Highlights

• Tier II Cities to Witness Strong Mall Growth: The expansion of mall space will be mainly concentrated in Tier II cities, resulting in a 25 per cent rise in the total mall space.
• Mall Owners' Revenue to Grow 7-9%: Despite hefty capital spending plans, mall owners are projected to achieve 7-9 per cent revenue growth in the current fiscal year, keeping their credit risk profiles stable.
• Occupancy Rate to Remain High: The positive trend in the retail sector is expected to maintain a high occupancy rate of 95 per cent.
• Diversified Consumption to Support Retailers: CRISIL Ratings highlights the vital role of diversified consumption across various categories in supporting retailers' operational performance in the medium term. Sectors such as jewelry, restaurants, sports, and electronics have witnessed double-digit growth this fiscal year, while the apparel and footwear sectors have also shown a strong recovery.
• Credit Risk Profiles Stable: CRISIL Ratings' reports show that credit risk profiles have stayed stable this year, owing to a solid operating performance and healthy balance sheets. The agency foresees a marginal improvement in the debt-to-EBITDA ratio, moving from 3.2 times in the previous fiscal year to 3 times in the current fiscal year.

Overall Outlook

The Indian retail sector is poised for continued growth in the coming years, driven by rising disposable incomes, increasing urbanization, and a growing preference for organized retail. The expansion of mall space, particularly in Tier II cities, will further provide a boost to the sector.