Many malls to open in 2022 as retail sector picks up pace

Nearly 10.15 million sq ft of new mall space is set to be available in the country this year--almost double compared with 2021--as demand for retail space in grade-A malls pushes developers to expedite construction, according to property consultant Anarock.

As per the data, about 15 new malls will enter the market in 2022 spread across 12 tier 1, 2 and 3 cities. Chennai will see the highest supply this year-- four new malls spread over an area of 2.55 million sq ft.

“As consumers return to more normal shopping and socialising patterns and populate malls again, India’s retail real estate market is responding to significantly improved footfalls. Malls are again seeing high occupancy levels, and the requirement for more organised retail space is pronounced,” said Pankaj Renjhen, COO of Anarock Retail.

Another 7.25 million sq ft of retail space is expected to get operational in 2023.

The other tier-1 cities which will get new mall supply include Ahmedabad, Bengaluru, Hyderabad, Mumbai, Pune and Ghaziabad in NCR, aggregating 5.1 million sq ft area. Tier 2 and 3 cities include Vadodara, Budaun, Indore, Nagpur and Udaipur, with a total area of about 2.5 million sq ft.

In 2020, Covid-19 had severely impacted the economy, and retail in particular. Brick-and-mortar retail stores in malls and high streets were hit hard, and a quick recovery seemed improbable.

"In the course of two severe waves that saw massive restrictions forced on malls, operators had to rethink their business plans and strategies," said Renjhen.

Going by the high leasing volumes by occupiers across categories and the momentum witnessed in the tier 2 and 3 cities, mall developers are finishing their projects and rapidly adding new inventory.

"In recent months, mall occupancy levels have returned to pre-pandemic highs across the country. New shopping malls are coming up, and the existing ones are looking for ways to expand, with consumer sentiment on the rise and malls witnessing increased footfalls,” said Rohtas Goel, chairman, Omaxe Ltd, whose retail project at Chandni Chowk is at final stages of construction.

Tier 2 and 3 cities are witnessing rapid mall penetration. The supply in these cities in the current year is close to 2.5 million sq. ft., recording a yearly growth of 91%.

These cities have seen considerable growth in disposable income, mobile internet penetration, and support infrastructure. Consumers in tier 2 and 3 cities now show an apparent propensity for branded products, which sets the stage for accelerated growth of organised retail across the country.

“While 2020 was a washout year with new mall supply of just 2.1 million sq ft in tier I cities, it nearly doubled to 4.01 million sq ft in 2021," said Renjhen.

“The performance of most malls in key consumption centres has either surpassed pre-pandemic levels in February 2020 or inched closer to those thresholds,” he said.

The pandemic-infused ecommerce boom cannot be washed away. However, the upcoming supply of mall spaces--clearly in response to increased demand--proves that physical retail remains the dominant force in India.

Covid-19 led to significant advancements, technological adaptation and a fresh burst of innovations in the retail sector as retailers respond to evolving consumer requirements. The result is omnichannel retail, which offers a new balance between convenience and experiential shopping--and has also boosted the demand for offline premises.