A recent report by Knight Frank India, reveals, the number of ‘ghost malls,’ defined as those with over 40 per cent vacancy rates, jumped from 57 in 2022 to 64 in 2023 across eight key cities.
This trend reflects a shift in consumer and retailer preferences towards higher-end shopping experiences. The report reveals a significant rise in underperforming malls, with a total area of 13.3 million sq ft categorised as ghost malls in 2023. This translates to a staggering 58 per cent increase in vacant space compared to the previous year.
The rise of ghost malls has resulted in substantial financial losses, estimated at Rs 6,700 crore ($798 million) in 2023. The National Capital Region (NCR) witnessed the highest concentration of ghost malls, followed by Mumbai and Bengaluru. However, Hyderabad bucked the trend and saw a decline in ghost mall presence. Kolkata, on the other hand, experienced the sharpest rise, albeit starting from a lower base.
The report highlights a clear distinction in performance between mall categories. Grade A malls continue to perform well with high occupancy rates and strong customer traffic. In contrast, Grade C malls and ghost malls are struggling. This is prompting landlords to explore strategies for either revitalising these properties or selling them off.
Interestingly, the total number of shopping centers in Tier I cities has actually decreased despite the addition of new ones. This decrease is due to the closure of 16 malls, either demolished for redevelopment or permanently shut down and potentially auctioned.
Based on the survey of over 340 shopping centers and 58 high streets across 29 Indian cities, Knight Frank's report provides valuable insights into the current state of the retail sector and the challenges faced by malls in different categories.
