Why Indian malls are booming while others struggle

Mumbai: India's demand for retail space in malls continues to outstrip supply, even as mall developments in many countries struggle due to the rise of online shopping. The Indian retail sector is witnessing strong growth, driven by urbanization, rising affluence, and evolving consumer preferences.
The latest RELEAP report by ANAROCK Retail highlights continued leasing momentum in organized retail, with demand outpacing supply for the third consecutive year.
The demand for retail space is also driven by global brands entering India and homegrown brands expanding their presence to strengthen their market position.
In 2024, over 6.5 million sq ft of organized retail space was leased across major cities, significantly exceeding new supply and bringing mall vacancy levels down to 7.8%. Rental values have risen due to high demand and shrinking vacancy rates. Retailers are increasingly opting for larger store formats, with 2,000-5,000 sq ft spaces seeing the highest transaction volume. Smaller stores of 1,000-2,500 sq ft are also in demand due to limited availability in malls.
The beauty & personal care and departmental store categories recorded an 11% growth in H2 2024, while apparel & accessories continued to dominate, accounting for 40% of total leasing transactions. Vacancy rates in premium malls have dropped further, with some operating at nearly full occupancy. Nationwide, mall vacancy has fallen from 15.5% in 2021 to 7.8% in 2024.
Anuj Kejriwal, CEO & MD of ANAROCK Retail, said “Significant upcoming supply is planned in NCR, MMR, and Hyderabad, which account for nearly 78% of total supply. Notable upcoming malls include World Mark, Aerocity (30 lakh sq ft), Ramsons Trends Square Mall, Bangalore (10 lakh sq ft), and Orion Mall, Kokapet, Hyderabad (10 lakh sq ft). "Rental values across malls and high streets are rising and are expected to continue climbing until new good-quality supply is added," he said.
Lifestyle International has leased the largest retail space, occupying 15,69,760 sq ft, followed closely by Reliance Projects & Property Management Services, which has taken up 15,02,823 sq ft. PVR Limited has secured 11,14,427 sq ft, while Inox Leisure has leased 9,48,505 sq ft, reflecting the strong presence of cinema chains in retail spaces.
Aditya Birla Fashion and Retail has taken up 8,12,241 sq ft, signaling robust demand from the apparel sector. Trent Limited and Shoppers Stop have leased 5,26,693 sq ft and 5,02,438 sq ft, respectively, while Cinépolis has secured 4,97,124 sq ft, further reinforcing the cinema industry's footprint in malls.
Decathlon Sports India has leased 4,71,986 sq ft, indicating steady growth in the sports retail segment. Uniqlo India and Inditex Trent Retail India, representing global fast fashion brands, have taken 3,92,550 sq ft and 3,75,108 sq ft, respectively. PVR Pictures has leased 3,66,804 sq ft, rounding off the list of major tenants driving demand for retail space.
Key high-street locations have also seen rising lease rates, with MG Road, Bangalore, at Rs. 250-350/sq ft, South Extension, Delhi, at Rs. 800-1,000/sq ft, and Linking Road, Mumbai, at Rs. 800-1,000/sq ft. Major tenants by total leased area include Lifestyle International (15.7 lakh sq ft), Reliance Projects & Property Management Services (15 lakh sq ft), and PVR (11.1 lakh sq ft).
Malls are evolving beyond shopping into multi-faceted experience zones, integrating dining, entertainment, and experiential offerings. Retailers are shifting to larger spaces in premium malls to enhance customer experience.
Globally, shopping malls are facing declining foot traffic due to the rise of e-commerce. The pandemic accelerated online shopping, reducing global mall visitors by 42%. Many retailers dependent on physical stores have shut down, while consumers increasingly prefer seamless, personalized shopping experiences online. Debt-laden retailers and financial instability led to over 12,000 store closures in the U.S. in 2020. Mall-based retail remains fragile, facing high operating costs and competition from open-air shopping centers, which are gaining preference due to lower overheads.
North America is seeing rising mall vacancy rates due to oversupply, with analysts predicting that one in four U.S. malls could shut down by 2022. Canada is facing similar challenges, with oversaturation and declining occupancy. In the UK, foot traffic is falling, particularly outside major urban centers, as e-commerce reshapes retail. Australia’s suburban malls are struggling with low foot traffic and rising vacancies, prompting some to repurpose spaces for mixed-use developments.
Traditional malls must evolve or risk obsolescence in the changing retail landscape. The focus is shifting toward experiential shopping, dining, and entertainment hubs. Retail real estate must adapt to maintain relevance and attract tenants. Malls need to integrate digital experiences to compete with online shopping, while brands are investing in flagship stores to enhance in-store experiences. Retailers are rethinking strategies to attract Gen Z and millennial consumers.
Mixed-use developments combining retail with residential and office spaces are gaining traction, and mall operators are focusing on destination-driven experiences to boost foot traffic. Sustainability and smart retail technologies are playing a larger role in mall development. Some malls are transitioning into entertainment hubs, co-working spaces, and wellness centers. Retailers must embrace omnichannel strategies to stay competitive. Despite challenges, high-quality malls remain resilient and continue to attract tenants. Future success will depend on innovation, adaptability, and consumer-centric experiences.