India to witness addition of 45 msf retail space in 5 years: Report

June 3, 2024: The five years, from Q2 2024 to the end of 2028, will see a surge in organised retail space completions, as per the latest report by JLL. The top seven cities (Mumbai, Delhi NCR, Bangalore, Hyderabad, Pune, Kolkata, Chennai) in India will welcome 45 million square foot (msf) through 88 new retail developments, outpacing the supply of the past decade (2014-2023), which was 38 msf.

In response to the evolving preferences of modern shoppers seeking unique experiences, developers are increasingly prioritising the development of larger retail centres. The data also suggests that upcoming retail developments will be larger in size compared to those that became operational in the last decade. Over the past ten years, the average size of new retail supply was approximately 3,91,099 square foot (sqft). However, this is expected to increase by 30% to reach 5,07,341 sqft with the addition of new supply during Q2 2024-2028. This signifies a notable trend in the retail market moving towards larger-sized experience-led developments.

Dr Samantak Das, chief economist and head research and REIS, India, JLL, said “Out of the 88 upcoming retail developments in the next five years, there will be 12 large-sized projects encompassing an area of at least 1 msf each. These projects will contribute a substantial portion, amounting to 37% of the total supply expected until 2028. This marks a notable increase in comparison to the previous decade, where retail centres of 1 msf and above accounted for just 27% of completed supply. Furthermore, Delhi NCR will see two retail centres of over 2.5 msf each in the next five years.”.

Increasing global travel has heightened shoppers’ awareness, leading to a demand for unique and immersive retail experiences. Larger developments incorporating entertainment, leisure activities, and dining options are creating comprehensive destinations that cater to the modern consumer. Majority (78%) of the upcoming retail supply of 45 msf is lease-based that allows developers to have greater control over the quality of the tenant mix and day-to-day management of the property, thus enabling them to command higher rentals. As a result, they can curate a diverse mix of tenants that align with their vision for the development.

Rahul Arora, head of office leasing advisory and retail services, India, JLL, said, “The existing retail stock, which stands at 89 msf, is expected to grow by 50% and reach 134 msf by end-2028. Delhi NCR is expected to garner the highest share (43%) in the supply in the next five years followed by Hyderabad with a share of 21% and Chennai having a share of 13%. Retail assets remain an attractive investment avenue for large foreign institutional investors, who are increasingly opting for greenfield and brownfield development platforms. Notably, 16% (7.2 msf) of the new supply is owned by institutional players”.