Real estate consulting firm CBRE South Asia has released its ‘India Market Monitor Q4 2023’ report. The retail sector in India experienced a record-breaking leasing activity in 2023, reaching 7.1 million sq. ft. across eight cities, marking a 47 per cent YoY increase.
This surge indicates growing interest from retailers in establishing new setups, expanding, and upgrading stores. The demand for retail spaces in recently completed malls played a significant role, contributing to nearly 30 per cent of total absorption.
In 2023, the total retail supply also reached a historic peak at six million sq. ft., a 316 per cent YoY increase, driven by the operations of 12 investment-grade malls in various cities.
Mumbai and Pune recorded a five-year high in leasing, while other cities like Bangalore, Ahmedabad, Delhi-NCR, Kolkata, and Hyderabad witnessed steady leasing activity.
Fashion & apparel dominated the leasing landscape in 2023, accounting for approximately 32 per cent of total leasing. Mid-range fashion value and athleisure brands were particularly influential.
Homeware & department stores followed with a 17 per cent share, while food & beverage, luxury, and consumer electronics accounted for 12 per cent, 9 per cent, and 6 per cent shares, respectively.
During Jul-Dec ’23, tier-I cities experienced a notable 67 per cent YoY increase in space uptake, totalling 4.2 million sq. ft. Bangalore led leasing activities, contributing to nearly 64 per cent of total absorption in Jul-Dec ’23.
The report anticipates continued expansion among international and domestic retailers due to increased mall supply and favourable consumer spending patterns. Additionally, the period recorded a significant 389 per cent YoY growth in supply across tier-I cities.
Foreign Retailers Expand Footprint
Foreign retailers are expanding in India through local partnerships. La Vie en Rose, a Canadian lingerie retailer, partnered with Apparel Group India, opening its first store in Delhi-NCR in July 2023 and later expanded to Pune and Bangalore.
Rimowa, a German luxury luggage brand, entered India through a partnership with Reliance Brands, opening its first store in Mumbai. Bugatti Fashion and West Elm, from France and the USA respectively, expanded to Pune, while Victoria’s Secret opened stores in Hyderabad and Pune during Jul-Dec ’23.
Anshuman Magazine, CEO of CBRE India, highlighted the resilience in discretionary spending and robust retail consumption, with retail leasing in tier-I cities reaching 7.1 million sq. ft. in 2023, surpassing the 2019 peak. The luxury sector saw a 162 per cent increase in 2023, indicating a positive trend with the entry of international brands. This momentum is expected to continue.
Ram Chandnani, Managing Director at CBRE India, noted a transformative shift in tier II cities like Chandigarh and Lucknow, where leasing activity surged to 1.2 million sq. ft. in 2023. Fashion & apparel, homeware, entertainment and hypermarkets command over 70 per cent of leasing activity. Cities with tourism and spiritual significance are becoming focal points for retailers, indicating a promising future for retail expansion and innovation.
India’s retail outlook for 2024 includes steady primary leasing, luxury brands strengthening their footprint, ongoing innovation in the retail landscape, stabilisation of consumer spending patterns, and continued exploration of tier II and other high-potential markets by retailers.
