Retail supply to double at 10.15 mn sft in 2022

Hyderabad: Retail real estate is staging a strong comeback, with nearly 10.15 million sft of new mall supply set to hit tier-1, 2 and 3 cities in 2022, and another 7.25 million sft in 2023. In 2022, new mall supply will be almost twice that of 2021, when approximately 5.76 million sft of new retail real estate supply entered the country.

As many as 15 new malls will enter the market in 2022 spread across 12 cities in the country. Chennai will see the highest supply of four new malls this year spread over an area of 2.55 million sft. Other tier-1 cities with new mall supply include Ahmedabad, Bengaluru, Hyderabad, Mumbai, Pune and Ghaziabad in NCR spanning 5.10 million-sft area. Tier-2 and 3 cities include Baroda, Budaun, Indore, Nagpur and Udaipur with total area of 2.50 million sft.

Covid-19 severely impacted the economy and retail sector in particular during 2020. 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," says Pankaj Renjhen, COO & Jt MD - Anarock Retail. "However, the massive nationwide vaccination drive resulted in a much milder 3rd wave at the beginning of 2022 - and the withdrawal of restrictions allowed economic activities to restart. This has fuelled new growth in the retail sector."

As consumers return to more normal shopping and socializing patterns and populate malls again, India's retail real estate market is responding to significantly improved footfalls. Malls are again witnessing high occupancy levels, and the requirement for more organized retail space is pronounced. 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.

"While 2020 was a washout year with new mall supply of just 2.1 million sft in tier-1 cities, it nearly doubled to 4.01 million sft in 2021," says Pankaj Renjhen.