Growing Demand for Grade A Retail Space
India is poised for a retail boom, requiring approximately 55 million square feet of Grade A mall space over the next four years to meet escalating consumer demand and match the retail space per capita of neighboring South Asian economies, according to a recent report by Cushman & Wakefield. The report, titled “Resurgent Retail: Powered by Rising Retail Consumption,” was unveiled at MAPIC India 2024 in Mumbai.

Current Landscape of Retail Development
Over the past eight years, India’s retail sector has added only 20 million square feet of Grade A mall space, averaging just 2.5 million square feet annually. Despite robust consumer demand, no new mall supply entered the market in the first half of 2024. Currently, India has a total Grade A mall inventory of 61 million square feet across its top eight cities, equating to a mere 0.5 square feet of retail space per capita—significantly lower than smaller countries like Indonesia and Vietnam.

Path to 1.0 Retail Space Per Capita
To achieve a 1.0 square feet per capita by 2027, similar to Indonesia’s current metrics, India must expedite the construction of Grade A malls. The forecasted pipeline for retail mall projects stands at only 18 million square feet from 2024 to 2027, highlighting a substantial gap in supply. With India’s per capita income expected to match that of Indonesia within the next four to five years, the potential for rapid growth is evident.

International Brands Eyeing Growth
The report also notes a surge in international retailers entering the Indian market, with the number of global brands increasing from an annual average of 12 before COVID-19 to 25 in 2024. This influx is driving demand for premium retail spaces and revitalizing the sector. Office-retail complexes (ORCs) and high streets are becoming prominent alternatives to Grade A malls, offering high visibility and attracting quality tenants.

Consumer Spending Patterns Shifting
Significant shifts in consumer spending patterns are contributing to this retail evolution. Discretionary spending in urban India has risen sharply, with expenditures on non-essential items climbing from 27% in FY2011-12 to about one-third by FY2022-23. Additionally, there has been a marked increase in spending on food delivery, travel, and premium consumer goods, indicating heightened consumer confidence.

Conclusion: A Call to Action
“The Indian retail sector is at a pivotal moment,” says Saurabh Shatdal, Managing Director of Capital Markets and Head of Retail at Cushman & Wakefield. “To capitalize on this growth, it is crucial to tackle supply challenges and ensure the availability of quality retail spaces. Achieving the target of 55 million square feet of Grade A retail space will require a concerted effort from all industry stakeholders.” As consumer confidence rises, so too does the potential for India’s retail market to thrive.