India's new mall space set to double in 2022, says Anarock report

New malls with nearly 10.15 million square feet, which is 86 per cent more than what was created in 2021, will come up in Tier I, II and III cities this year, according to a report of Anarock.

Another 7.25 million square feet will follow in 2023.

In 2021 approximately 5.76 million square feet of retail real estate was created.

The report said in 2022, 15 malls would enter the market, spread across 12 cities in the country.

Chennai will see the highest number -- four -- spread over 2.55 million square feet.

Other Tier 1 cities with new malls include Ahmedabad, Bengaluru, Hyderabad, Mumbai, Pune, and Ghaziabad -- together comprising 5.10 million square feet.

Tier 2 & 3 cities include Baroda, Budaun, Indore, Nagpur, and Udaipur with an area of approximately 2.50 million square feet.

“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,” the report said.

The last two years saw two severe pandemic waves, due to which there were restrictions on mall operations, and operators had to rethink their business plans and strategies, said Pankaj Renjhen, chief operating officer and joint managing director, ANAROCK Retail.

“The massive nationwide vaccination drive resulted in a much milder third wave at the beginning of 2022 -- and the withdrawal of restrictions allowed economic activities to resume. This has fuelled growth in the retail sector,” Renjhen added. 

With shopping and socialising patterns showing signs of normalcy, India’s retail real estate market is responding to significantly improved footfalls. Malls are witnessing a high occupancy, and the requirement for more organised retail space is pronounced, the report said.

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 inventories.

“While 2020 was a washout year with a new mall supply of just 2.1 million square feet in Tier I cities, it nearly doubled to 4.01 million square feet in 2021,” said 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,” he added.

Tier II and III cities are witnessing rapid mall penetration. The supply in these cities in the current year is close to 2.5 million square feet, recording a yearly growth rate of 91 per cent. These cities have seen considerable growth in disposable incomes, mobile internet penetration, and support infrastructure.

Consumers in Tier II and Tier III cities now show an apparent propensity for branded products, which sets the stage for accelerated growth in organised retail across the country, the report said.

“The pandemic-infused ecommerce boom cannot be wished away and continues to be patronised by some segments of society. However, the upcoming supply of mall spaces -- clearly in response to increased demand -- proves that physical retail remains the dominant force in India,” the report said.

“Covid-19 led to significant advancements, technological adoption, 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.”