Demand for retail space in India is driven by increased discretionary spending, shifting consumer preferences, rising confidence and international retailer interest
A recent report by Cushman & Wakefield, titled ‘Resurgent Retail: Powered by Rising Retail Consumption’, unveiled at MAPIC India 2024, highlights an urgent need for the expansion of premium retail spaces. It estimates that approximately 55 million square feet (MSF) of Grade-A mall space will be required over the next four years to meet escalating demand and align with the retail space per capita (RSPC) of other South Asian economies. Currently, RSPC is calculated by dividing Grade A mall space by the total population.
Shifting Consumer Preferences and International Interest
The report notes a significant shift in consumer spending, with a rising focus on discretionary items and experiential retail. Recent data indicates that urban India’s expenditure on discretionary items has increased from 27 per cent in FY2011-12 to nearly one-third in FY2022-23, while spending on essentials has decreased. This trend, reflected in higher monthly spending on food delivery and increased credit card usage, demonstrates greater consumer confidence and a willingness to spend on travel, vehicles and premium consumer durables.
Vineet Dawar, Sr. VP – Sales & Strategy at Elan Group, stated, “As Indian consumers become more discerning, they seek curated shopping environments, personalised services and unique experiences. Gurgaon, with its thriving economy, cosmopolitan culture and excellent infrastructure, has emerged as a prime destination for retailers looking to cater to this growing demand. The city’s strategic location, accessibility and high-quality retail offerings have attracted leading brands and developers, making it a hub for premium shopping experiences.”
Moreover, the report highlights the growing interest of international retailers in the Indian market. According to AT Kearney’s Global Retail Development Index 2023, there is heightened urgency for global brands to enter and expand in India, thanks to macroeconomic growth, rising incomes and a robust digital payment ecosystem. The average number of global brands entering India has jumped from a pre-COVID yearly average of 12 to 25 as of 2024.
The Need for Infrastructure and Strategic Development
Despite strong consumer demand, India has seen an average of 2.5 MSF of Grade-A mall developments commence operations annually over the past eight years, resulting in a total addition of 20 MSF during this period. Notably, the first half of 2024 saw no new mall supply enter the market, leaving India’s total Grade-A mall inventory at 61 MSF across the top eight cities, equating to just 0.5 square feet of RSPC—significantly lower than smaller countries like Indonesia, the Philippines and Vietnam.
To achieve a 1.0 RSPC by 2027, India needs to construct around 55 million square feet of mall space over the next four years. Kunal Rishi, COO of Paras Buildtech, highlighted that “With urbanization set to reach nearly 40 per cent by 2030, the demand for modern, strategically located retail spaces is increasing to cater to evolving consumer preferences. As consumer habits shift and more brands enter the market, the focus will be on creating environments that offer more than just shopping—integrating lifestyle, entertainment and community engagement. While e-commerce continues to grow, it highlights the enduring importance of physical stores in providing unique, experiential shopping that online platforms cannot replicate. The development of high-quality mall spaces will be key to supporting this evolution, offering retailers the infrastructure to meet the needs of a dynamic and rapidly changing market.”
Additionally, the report discusses the rise of office-retail complexes (ORCs) and prominent high streets, which are becoming increasingly important in Indian cities due to space constraints in the Grade-A mall sector. Over the past 7-8 years, more than 70 major ORC projects have been delivered, successfully attracting quality retail tenants.
Saurabh Shatdal, Managing Director, Capital Markets and Head of Retail at Cushman & Wakefield, concluded, “India’s retail sector is at a pivotal moment. The rising consumer confidence and increasing discretionary spending are clear indicators of the sector’s potential. To capitalise on this growth, it is imperative to address the supply-side challenges and ensure the availability of quality retail spaces.”
