Retail Leasing in India: Will 2025 bring a revival? CBRE shares insights
29 January 2025, Mumbai
CBRE's latest report on retail leasing trends reveals a complex picture for India's shopping malls and high streets. While 2024 saw a dip in demand, the future is more promising with new developments and evolving consumer experiences.
Overall trend
The study shows leasing of retail spaces across eight major Indian cities witnessed a 10 per cent decline in 2024, settling at 64 lakh sq. ft, down from 71 lakh sq. ft. in 2023.
CBRE, the real estate consultant behind the report, attributes this dip primarily to supply constraints. However, the report maintains an optimistic outlook for the coming year, with projections of significant growth due to upcoming Grade A malls and a robust supply pipeline.
Table: Citywise highlights
|
City |
2023 (in lakh sq ft) |
2024 (in lakh sq ft) |
Trend |
Key factors |
|
Delhi-NCR |
14 |
10 |
Decline |
Supply constraints, cautious retailer expansion |
|
Bengaluru |
19 |
19 |
Flat |
Strong demand offset by limited new supply |
|
Mumbai |
10 |
8 |
Decline |
High street rents impacting demand |
|
Hyderabad |
7 |
10 |
Increase |
New mall supply driving leasing activity |
|
Chennai |
6 |
7 |
Increase |
Stable demand, growing retail market |
|
Pune |
8 |
6 |
Decline |
Limited quality space availability |
|
Kolkata |
1 |
2 |
Increase |
Increased retailer interest, improving infrastructure |
|
Ahmedabad |
5 |
4 |
Decline |
Slower economic growth impacting demand |
The study highlights supply constraints that are a shortage of quality retail spaces in prime locations played a significant role in the overall decline.
This was particularly evident in cities like Delhi-NCR and Pune. Local economic conditions too influenced demand in certain cities.
Ahmedabad, for example, experienced a slowdown in leasing activity, reflecting a slower pace of economic growth. Retailer expansion plans and strategies also contributed to the trends. Some brands adopted a more cautious approach in 2024, impacting demand in certain markets.
Anshuman Magazine, Chairman & CEO-India, Southeast Asia, Middle East & Africa, CBRE says, "India's retail landscape is set for significant growth in 2025, with primary leasing demand gaining momentum and 5-6 million sq ft of Grade A malls expected to commence operations in cities such as Delhi-NCR, Hyderabad, Mumbai, and Bengaluru."
However, some cities like Hyderabad bucked the national trend, registering a significant increase in retail leasing. This growth can be attributed to the influx of new, high-quality mall spaces that attracted retailers and boosted demand. The city's robust economic growth and increasing consumer spending further supported this positive trend.
Future outlook
The report anticipates a resurgence in retail leasing activity in 2025. And what’s driving this optimism is the supply of new malls. The completion of several Grade A mall projects across major cities will significantly increase the availability of quality retail space.
Also, retail spaces are transforming into experiential destinations, offering a mix of shopping, dining, and entertainment. This shift is expected to attract consumers and drive demand. And strong demand from mid-range fashion, value fashion, athleisure, and jewelry segments is expected to boost leasing activity.
Thus while 2024 had its share of challenges for retail leasing in India, the long-term outlook remains positive. With new supply entering the market, evolving consumer preferences, and innovative retail strategies, the sector is poised for a dynamic and transformative year ahead.
