New mall supply to double to 10.15 million square feet by 2022 across-India: ANAROCK

1 Aug 2022 , 03:06 PM

With over 10.15 million square feet of new mall supply expected to reach Tier 1, 2, and 3 cities in 2022 and another 7.25 million square feet in 2023, retail real estate is making a strong comeback. Nearly twice as many new malls will open in 2022 as there were in 2021 when roughly 5.76 million square feet of new retail space entered the market.

In 12 cities across the nation in 2022, up to 15 new malls will open for business. Four new malls totalling 2.55 million square feet will be built in Chennai this year, which will have the biggest supply.

Ahmedabad, Bangalore, Hyderabad, Mumbai, Pune, and Ghaziabad in the NCR are additional Tier 1 cities with a new mall supply, totalling 5.10 million square feet. With an estimated total size of 2.50 million square feet, Tier 2 and Tier 3 cities include Baroda, Budaun, Indore, Nagpur, and Udaipur.

In 2020, COVID-19 had a significant negative influence on the whole economy, particularly on retail. Retail establishments on high streets and in malls were severely impacted, and a speedy rebound seemed unlikely.

“Operators had to rethink their business plans and tactics during two severe rounds that saw enormous limits put on malls,” says Pankaj Renjhen, COO & Jt. MD – ANAROCK Retail. “The enormous nationwide vaccination campaign produced a considerably milder 3rd wave in the beginning of 2022, and the lifting of limitations allowed for the recovery of economic activity. The retail industry has grown as a result of this.”

India’s retail real estate market is responding to noticeably increased foot traffic as customers resume more typical shopping and socializing habits and repopulate malls. Malls are once more experiencing strong occupancy rates, and a clear need for more organized shop space exists.

According to the high occupancy rates across all categories and the momentum seen in Tier II and III cities, mall developers are wrapping up their renovations and adding new inventory quickly.

According to Pankaj Renjhen, while 2020 was a washout year for new mall construction in tier I cities, it nearly doubled to 4.01 million square feet in 2021. In February 2020, the majority of malls in important consumer hubs either outperformed pre-pandemic levels or drew even closer to those thresholds.

Rapid mall penetration is happening in Tier II and Tier III cities. The current year’s supply in these cities is around 2.5 million square feet, representing yearly growth of 91%. Among them are Baroda, Budaun, Indore, Nagpur, and Udaipur.

The disposable income, mobile internet penetration, and support infrastructure in these places have all increased significantly. Consumers in Tier II and Tier III cities increasingly appear to have a preference for branded goods, which creates the conditions for organised retail to expand more quickly across the nation.

It is impossible to wish away the pandemic-fueled e-commerce boom, which is still being supported by some facets of society. The fact that more mall space will soon be available, obviously in response to rising demand, demonstrates that physical retail is still in charge in India.

As merchants adjust to changing consumer demands, COVID-19 has sparked substantial improvements, technical adaptation, and a new wave of innovations in the retail industry. Omnichannel retail is the outcome, and it provides a new balance between convenience and experiential buying. It has also increased demand for offline properties.