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    Retail Sales in malls in India to touch $39 bn by 2028: Knight Frank

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    The organised retail sales volume in eight Indian cities of NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata and Ahmedabad is estimated to grow at an annual rate of 17% to top $136 billion by the end of fiscal year 2028 from $52 billion in fiscal year 2022, a latest report by Knight Frank India said.

    In its latest report, ‘Think India, Think Retail 2022 – Reinventing Indian Shopping Malls,’ the international property consultant, also stated that in the same period, potential retail sales in Indian malls are estimated to grow at a Compound Annual Growth Rate (CAGR) of 29% in the FY 2022 – 28 period, reaching $39 billion by FY 2028. Retail sales in Indian malls across these cities grew at a CAGR of approximately 3% to reach $8 billion in FY 2022 while in FY 2023, the potential consumption is estimated to surpass the pre – COVID-19 levels to reach $11 billion. The organised retail sales volume will grow at an expected CAGR of 24% between FY 2017 and FY 2022 maintaining a healthy rate of growth despite the pandemic induced slowdown.

    “The retail real estate sector has reached a new level of maturity where smaller sized and lower grade developments are giving way to Grade A malls. The existing Grade A malls have over 95% occupancy which is indicative of the demand for quality real estate in this segment,” says Shishir Baijal, Chairman & Managing Director at Knight Frank.

    As per the report, the east and north regions witnessed a strong recovery in consumption reaching new heights by crossing pre-pandemic levels in March 2022. The Eastern region registered a significant increase in index value from 100 (as a base index as of March 2019) to an index value of 123 at the end of March 2022. The consumption index in the northern region increased to 118 during the same period. The southern region registered a steady improvement in recovery crossing pre-pandemic levels registering an index value of 108 whereas the western region took the worst hit due to tighter restrictions and consumption was marginally less than pre-pandemic levels (index value of 99) at the end of March 2022.

    As a result, categories such as apparels and accessories have witnessed maximum upsurge. The share of apparels has increased to 29% in malls from 26%. Accessories such as books, watches, jewellery, eyewear, and others witnessed a prominent increase from 8% in pre-Covid to 12% in space take-up in malls. Beauty, footwear and entertainment as categories also registered a marginal growth during the same period. Other categories which include gymnasium and other miscellaneous categories were the worst hit and recorded a gradual decrease from 21% in pre-Covid to 12% in the post-Covid period.

    Given that retail malls are experiential, more of the future developments will want to create destinations. Therefore, scale and quality of development would require developers to specialise in shopping centre development and operations. Like the office segment, post consolidation, retail real estate too will offer great opportunities for investments including REITs in the future,” Baijal added further.