Fashion & apparel, along with homeware and department stores drove demand in July-December 2023
New Delhi: The retail sector recorded an all-time high leasing in 2023, touching a historic level of 7.1 million sq. ft. across eight cities, an increase of 47% on a Year on Year (Y-o-Y) basis, said real estate consulting firm CBRE on its latest report Indian Market Monitor Q4 2023.
The report adds that India has emerged as one of the most promising consumer markets, indicating heightened retailers’ interest in new setup, expansion and upgradation of stores.
Demand for retail spaces in recently completed malls played a significant role in shaping the overall retail space occupancy during the year, and nearly 30% share in total absorption was led by primary leasing in these malls. Additionally, the total retail supply also reached a historic peak at 6 million. sq. ft. in 2023, over 316% Y-o-Y increase. This rise in supply can be attributed to the commencement of operations of 12 investment-grade malls located in Bengaluru, Pune, Mumbai, Hyderabad, Ahmedabad, Delhi-NCR and Chennai. During Jul-Dec 2023, nearly 4.9 million sq. ft. of new retail space became operational across the major cities.
“Key sectors like fashion & apparel, homeware, department stores, food & beverage, entertainment, and luxury are driving this growth. The luxury sector, which saw a 162% increase in 2023, shows a promising trend with the entry and expansion of international brands. This positive momentum is expected to continue, aligning with our anticipation for a similar trend in the years ahead,” said Anshuman Magazine Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE.
Mumbai and Pune recorded 5-year high leasing at 1.0 and 0.8 million sq. ft., respectively. Bangalore, Ahmedabad, Delhi-NCR, Ahmedabad, Kolkata and Hyderabad witnessed steady leasing activity.
The retail leasing in 2023 was predominantly steered by fashion & apparel, with a 32% share in total leasing. This was largely influenced by mid-range fashion value and athleisure brands. Homeware & department stores accounted for a 17% share, followed by food & beverage with a share of 12%, luxury at a 9% share, and consumer electronics at a 6% share in overall leasing during 2023.
During the July-December 2023 period, there was a notable increase in space uptake across tier-I cities, witnessing a 67% Y-o-Y increase, totalling 4.2 million sq. ft. The leasing trend in July-December 23 saw an uptick of 43% as compared to the January-June 2023 period when the leasing stood at 2.9 million sq. ft. Bangalore led the leasing activity, followed by Mumbai and Pune, contributing to nearly 64% of the total absorption in July-December 2023. The anticipation of increased mall supply and favourable consumer spending patterns is expected to encourage expansion among both international and domestic retailers in the future. The July-December 2023 period recorded a significant increase in supply across tier-I cities, showing a 389% Y-o-Y growth.
Foreign retailers continue to place their bets in India through local partnerships. Canadian lingerie retailer La Vie en Rose made its debut in India in partnership with Apparel Group India and launched its first store in Delhi-NCR in July 2023 and later expanded in Pune and Bangalore. Similarly, Rimowa, a German luxury luggage brand, entered India through its partnership with Reliance Brands and opened its first store in Mumbai. Other notable expansions by international players include French fashion & apparel brand Bugatti Fashion and the American furniture brand West Elm opening their stores in Pune and American lingerie brand Victoria’s Secret opening stores in Hyderabad and Pune during the July-December 2023 period.
