Key Points

The sector's rapid evolution from fragmented, quantity-driven growth to quality, institutional consolidation is a transformation saga with few global parallels.

"Grade A malls have risen from just 22 per cent of the inventory in the top seven cities in 2015 to a projected 60 per cent by 2027. Meanwhile, vacancies have reduced from 19 per cent to about 9 per cent -- a dramatic sign of improving quality and demand," according to latest report by Anarock research.

According to the report, this trend is most visible among top players which collectively own 58 malls spanning 34 million square feet and have over 45 new malls spanning over 42.5 million sq ft of prime retail space in the pipeline for the next 3-5 years.

"It is notable how quickly institutional investment is spreading beyond the metros into Tier 2 hubs. Chandigarh, Indore, Surat, Bhubaneshwar, and Coimbatore, with highly aspirational populations and increasing purchase power, are the new growth centres for organised retail," said Anuj Kejriwal, CEO and MD, Anarock Retail.

The Indian retail industry is driven by changing consumer expectations, global brands' preference for standardised and experiential spaces, he added.

However, growth also hinges on institutional investments, which means that mall assets must also appeal to private equity and REIT investors.

Despite its rapid transformation, India still lags behind developed economies, with just 110 million sq ft of quality retail stock, compared to 700+ million sq ft in the US and 400+ million sq ft in China, where mall assets are almost exclusively institutionally owned.

However, India's unrelenting urbanisation and consistently odds-beating retail sales productivity -- Rs 1,200-1,600 per square feet per month in Grade A malls -- underscore the massive upside potential.

With new mall launches averaging over 1 million square feet, further REIT activity is in the cards. With a strong move towards 'bigger, better, branded' malls, India's retail real estate landscape is preparing for a world-class, experience-driven future, the report stated.

- IANS