Are Green Shoots Visible for Indian Malls?

Retail real estate (malls) has been engulfed by prolonged periods of slow growth. The asset class saw limited investments and general scepticism from global and national brands between 2010-2014, driven by multiple factors, such as challenges in setting up multi-brand outlets in India due to FDI clause of at least 30% of local sourcing, unwillingness from developers to invest heavily into retail spaces due to high gestation period and low rental returns and limitations in leasing activities due to lack of prime spaces in high streets and shopping centers. Further, increasing adoption of e-commerce by Indian consumers in the last few years was also causing a dip in revenues for brick and mortar retailers and consequently affecting mall owners / mall managers as well.

However, in the last few quarters, green shoots became visible for the asset class and these will eventually lead to its strong growth in India.


An estimated 34 new malls will be coming up by 2020 in the top 8 Indian cities[1], totaling approximately 13.6 million square feet (msf). This new supply will add approximately 20% stock to the current total available mall inventory of 76 msf in these cities and would address the critical gap of non-availability of supply at viable locations. The only exception in the top 8 cities will be Ahmedabad where no new mall space is expected in the next few quarters. [1] Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune

Malls Under Construction as of September 2017
CityGLA (sf)No. of malls
Delhi NCR4,034,0008
TOTAL 13,637,00034


Many malls across India were opened in haste and had to be shut down or modified for other uses on account of poor customer or retailer response. Some malls failed due to poor judgment on catchment area coming of age. They were a burden on the balance sheets of their owners locking up precious land and capital as rental returns stayed low.

Are Green Shoots Visible for Indian Malls?

Some of these properties are now being refurbished and revived as retail destinations. A few such examples of ongoing projects are South City Mall in Kolkata, Spice Mall in Noida and Shipra Mall in Ghaziabad. Some of the completed projects are – East Delhi Mall in Ghaziabad which restarted operations after refurbishment, DLF Emporio in New Delhi which has been redeveloped into a mall from a cinema complex, Nitesh Hub Mall Pune which was closed for a year and resumed operations post change in ownership.


Investors are showing interest in the sector as seen from the growth in private equity investments in the past few quarters. In between the period of 2015 – Q2 2017, the retail real estate sector has received total PE investments of USD 2.5 bn.

While 2015 saw about USD 0.15 bn (INR 10 bn) of investments, the year 2016 saw a massive surge in private equity investment taking the number up to USD 0.98 bn (INR 63 bn) and registering 6x growth. The first two quarters of 2017 have already seen approximately INR 0.26 bn (INR 17 bn) and the remaining quarters are expected to see a surge.

Retail Real Estate Private Equity Investment in INR bn

  • INR bn

Source: Cushman & Wakefield Research

Investor confidence is critical to ensure the growth of the sector, therefore, sustained uptick in activities in the retail real estate allow for a positive growth outlook

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