Retail Renaissance: JLL predicts 38 mn sq. ft. expansion in Indian retail space by 2027
25 November 2023, Mumbai
JLL India, a division of the globally recognized real estate services firm specializing in commercial property and investment management, recently released a comprehensive report on India’s retail landscape.
Observation
The report foresees a significant upswing in the availability of new retail space across the country. Between the latter half of 2023 and 2027, an estimated 38 million sq. ft. of retail space is expected to be on offer for rental and leasing in the top seven cities.
India has become a focal point for international brands spanning the high street, bridge, and luxury categories, seeking to establish their presence in the market.
Nuanced picture
This heightened demand is particularly noticeable in major cities like Mumbai, Delhi-NCR, and Bengaluru. The report pinpoints 24 international brands actively in pursuit of retail spaces in the Indian market.
Interesting facts
A noteworthy illustration of this growth is the inauguration of Reliance Industries' Jio Luxury Plaza on November 1, 2023, covering four levels and an expansive 7,50,000 sq. ft. The mall showcases an array of premium brands, including Valentino, Tory Burch, YSL, Versace, Tiffany, Laduree, Pottery Barn, Louis Vuitton, Gucci, and Cartier.
Another driving force behind the rapid expansion of retail space leasing is the increasing omni-channel strategy by brands. This approach not only enhances their visibility but also elevates the overall shopping experience for consumers.
Response to changing face of consumption
Presently, malls and shopping districts in cities are witnessing increased footfalls due to evolving shopping and socializing habits among consumers. This surge in physical store visits has compelled brands and retailers to expand their brick-and-mortar presence.
Consumers are seeking enjoyable, convenient, and immersive experiences, motivating them to prefer in-store purchases over online transactions. With the rise in footfalls, there has also been a corresponding increase in the average rental rates for prime locations.
Study
As per real estate consultants Cushman & Wakefield, high-street locations nationwide have seen rental surges of up to 50 per cent in 2022, while malls experienced an average yearly rent increase of 10 per cent. As Abhishekh Trehan, Executive Director of Trehan Iris, highlights Delhi-NCR is a flourishing market for the retail industry, with an anticipated 31 per cent of new supply expected to be in Delhi-NCR.
Emerging areas in the National Capital Region (NCR), such as New Gurugram and Greater Noida West, are identified as having significant potential to become preferred Grade A retail destinations.
As of the first half of 2023, there were 89 million sq. ft. operational retail space spread across the top seven cities – Delhi NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai, and Hyderabad.
Growth figures shows upward swing
The first half of 2023 shows major growth as compared to the same period in 2022, with a 24 per cent surge.
Multiple data-points
The January to June period saw additional lease of 2.87 million sq. ft. 65 per cent of this new leasing was in Delhi-NCR, Bangalore, and Ahmedabad. Total leasing for the quarter that ended on June 30 was 1.3 million sq. ft. and Bangalore and Delhi-NCR accounted for 59 per cent of retail space lease.
Delhi-NCR has a significant 24 per cent share of all leases during this time. Fashion & clothing drove leasing activity during the quarter, accounting for 38 per cent of total lease activity. Food and beverage sector held 18 per cent share, while luxury and home & department store sectors each had 11 per cent share.
Prognosis
With this remarkable growth, retail space in India has emerged as the world’s fifth-largest and is anticipated to reach an astounding value of $2 trillion by 2032, as per Boston Consulting Group analysis.
With these projections and ongoing growth, the future of Indian retail leasing surely looks promising.
