Nearly 10.15 million square feet of new mall supply is set to hit the Tier 1, 2 and 3 cities in 2022, and another 7.25 million square feet in 2023. Staging a strong comeback, retail real estate has plans to enter as many as 15 malls in the market in 2022, spread across 12 cities.
Chennai will be seeing the emergence of four new malls in 2022, spread over an area of 2.55 million square feet.
Other tier 1 cities with new mall supply include Ahmedabad, Bangalore, Hyderabad, Mumbai, Pune and Ghaziabad in NCR, spanning 5.10 million sq. ft. area. Tier 2 and 3 cities include Baroda, Budaun, Indore, Nagpur and Udaipur, with a total area of approx. 2.50 million sq. ft.
Covid-19 severely impacted the general economy – and retail in particular – in 2020. Brick-and-mortar retail stores in malls and high streets were hit hard, and a quick recovery seemed improbable.
“In the course of two severe waves that saw massive restrictions forced on malls, operators had to rethink their business plans and strategies,” says Pankaj Renjhen, COO & Jt. MD – ANAROCK Retail. “However, the massive nationwide vaccination drive resulted in a much milder 3rd wave at the beginning of 2022 – and the withdrawal of restrictions allowed economic activities to restart. This has fuelled new growth in the retail sector.”
As consumers return to more normal shopping and socialising patterns and populate malls again, India’s retail real estate market is responding to significantly improved footfalls. Malls are again witnessing high occupancy levels, and the requirement for more organised retail space is pronounced.
Going by the high leasing volumes by occupiers across categories and the momentum witnessed in Tier II and III cities, mall developers are finishing their projects and rapidly adding new inventory.
“While 2020 was a washout year with new mall supply of just 2.1 million sq. ft. in tier I cities, it nearly doubled to 4.01 million sq. ft in 2021,” says Pankaj Renjhen. “The performance of most malls in key consumption centres has either surpassed pre-pandemic levels in February 2020 or inched closer to those thresholds.”
Covid-19 led to significant advancements, technological adaption, and a fresh burst of innovations in the retail sector as retailers respond to evolving consumer requirements. The result is omnichannel retail, which offers a new balance between convenience and experiential shopping – and has also boosted the demand for offline premises.