by THO
Retail leasing is expected to sustain between 6 to 6.5 mn sq ft in 2024 fueled by leasing activity across malls and high streets with Hyderabad, Bengaluru and Delhi likely to account for maximum share, a report by CBRE titled ‘2024 India Market Outlook’ has said.
The report highlights a stable supply environment for the retail sector in 2024 due to the completion of numerous high-quality mall developments. By the year-end, 5-6 mn sq ft. of investment-grade mall space will become operational in tier-I cities, it said.
Retail demand across investment-grade malls, prominent high streets and standalone developments has grown consistently since 2020. The year 2023 reported absorption of nearly 7.1 million sq. ft., a 47% Y-o-Y growth in tier-I cities. Leasing activity was primarily driven by Bengaluru, Delhi-NCR and Mumbai, with the three cities cumulatively accounting for nearly 61% share, it said.
Retail categories that will dominate
In 2024, among the retail categories, the home décor segment is likely to expand in online and offline formats, while fashion and apparel players will continue expanding in tier-I cities across malls and high streets. Domestic jewellery brands are also expected to continue to expand.
Emerging as an alternative to traditional cinema halls, the growing interest of consumers in the entertainment category is likely to lead to more traction in leasing as well.
Anchor tenants in malls to proceed with caution
The report indicates that retailers, including anchor tenants and established brands, are expected to proceed cautiously with expansion plans. They will prioritize locations with high visibility, strong foot traffic and favorable consumer demographics, the report showed.
As a result, rental growth is expected to rationalize across both primary and secondary locations, the report showed.
Domestic brands to proceed cautiously with expansion plans; global brands optimistic despite economic challenges overseas
Moreover, while well-established domestic brands with a solid presence are likely to proceed cautiously with their expansion plans, international newcomers aiming to establish themselves, especially in tier-I cities, are anticipated to persist with their expansion strategies despite global economic challenges.
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“Driven by robust consumer demand, India’s retail sector saw remarkable growth in 2023. Looking ahead to 2024, both retailers and consumers are cautiously optimistic. While tier-I cities remain key expansion hubs, promising tier-II markets (Chandigarh, Jaipur, Lucknow, Indore, and Kochi) are attracting new players. Malls are transforming into experiential centers, offering a mix of entertainment, dining and shopping,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.
“Fuelled by pent-up demand and strategic expansion, India’s luxury retail sector is experiencing a leasing boom, attracting both established brands deepening their presence and new international players entering the market. This expansion reaches beyond Delhi and Mumbai to the newer markets like Hyderabad and Ahmedabad,” he said.
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“Foreign luxury retailers are entering India through partnerships with local players. The upcoming launches of a few brands underline this trend. This reflects a renewed optimism in India’s retail sector, with investments from major developers in tier-I cities, while institutional investors target tier-II cities, creating a dynamic retail landscape,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.
