February 07, 2024: The physical retail market has a robust supply of 41 million sqft of retail developments scheduled to be operational between 2024 and 2028 across top seven cities of India, mentions a recent JLL report. This supply constitutes projects which are either under construction or in active planning stage. Delhi-NCR is projected to have the majority share (34%), followed by Chennai (20%), Bengaluru and Hyderabad each at 15%.
According to the report, large foreign institutional investors continue to acquire/invest in retail assets via greenfield and brownfield development platforms. These investors currently hold around 24% (9.7 million sqft) of the new supply which will get delivered over the next five years.
The report cites stable economic conditions as the catalyst for the consumption led growth which has enabled footprint expansion by retailers and new mall announcements. Apart from the strong supply pipeline, mall developers are focusing on building larger-sized malls to offer better shopping experience.
Source: JLL Research, Retail
“Encouraged by the increased buoyancy of the Indian economy, leading real estate developers have made significant announcements to launch retail developments in the country. A substantial proportion of the upcoming supply is by institutional players. The operational stock of retail developments which stands at 91 million sqft is expected to increase by 45% and reach 132 million sqft by the end of 2028. With the launch of India’s first retail-led REIT in 2023, there may be more acquisitions to expand the retail portfolio further. As most global institutional funds have created retail development platforms with key developers, the retail segment is set to get on a faster growth trajectory,” said, Samantak Das, chief economist and head research & REIS, India, JLL.
2023 saw prominent mall openings
“A total of 16 retail developments with a gross leasable area of 6.2 million sqft became operational in 2023, up by 125% y-o-y. Notably, 44% (2.7 million sqft) of the new supply that became operational in 2023 had the presence of institutional funds. The average size of mall developments that got completed in 2023 has increased by 41% from 2,76,800 sqft in 2022 to 3,89,900 sqft. Developers are coming up with bigger malls to offer elevated experience to the shoppers, be it entertainment, F&B, or Fashion.” said Rahul Arora, head of office leasing advisory and retail services, India, JLL.
Sustained new store openings and pre-commitments
According to the JLL report, in 2023, 8.7 million sqft of gross leasing across malls and prominent high streets was recorded in top seven cities. Bengaluru led the gross leasing with a share of 33%, followed by Delhi-NCR with a share of 18% and Mumbai with a share of 17%. Consumer confidence is getting translated into expansion by retailers to increase their store network and sales.
Fashion and apparel had the highest share of 40% in the total leasing volume. Super value and value fashion segments have witnessed great traction from leading retailers as they are launching their new formats and expanding in this segment. Other categories that contributed majorly were F&B (16%), entertainment (13%), home & furnishing (6%) and daily needs & grocery (5%).
Source: REIS, JLL Research
India remains on radar of international brands’ expansion plans
The JLL report pointed that a total of 14 new international brands entered India in 2023, up from 11 and 8 brands in 2022 and 2021 respectively. Majority (around eight brands) of the new entrants this year opened their first stores in Mumbai followed by Delhi NCR with F&B segment being the top ranker.
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