A majority of Indian shoppers, it seems, are either thronging the high streets or the giant, glitzy malls all around them. Some are avoiding both, and buying online with a vengeance. But sandwiched in between are the smaller malls, a large number of whom are sliding into oblivion, earning the unwanted adjective of “ghost” shopping centres, defined as properties with a vacancy rate of over 40%.A report by Knight Frank, released on Tuesday, said there has been a 59% increase in such low-performing retail assets with 13.3 million square feet of shopping space remaining vacant, resulting in the loss of `6,700 crore of revenue for developers in 2023.
In 2022, the vacant space was 8.4 million sq ft. In the top eight cities, including Delhi, Mumbai and Bengaluru, the total number of shopping malls declined to 263 in 2023, with eight new retail centres added but 16 shut down.The problem is set to worsen. Among small shopping centres, with an average leasing area of 100,000 sq ft, 132 are on the verge of turning into ghost malls — with the vacancy rate rising to 36.2% in 2023 from 33.5% in the previous year, the report said.
This is in sharp contrast to the situation faced by bigger malls. With an average leasing area of 500,000 sq ft, the vacancy rate remained at 5%, and at 15.5% among middle-level shopping malls, it said.The National Capital Region (NCR) accounted for the highest number of ghost malls with 5.3 million sq ft (rise of 58% y-o-y), followed by Mumbai with 2.1 million sq ft (86%) and Bengaluru with 2 million sq ft (46%). Hyderabad is the only city to record a decline in the stock by 19% to 0.9 million sq ft in 2023. The sharpest rise was recorded in Kolkata, albeit on a lower base, the consultant said.
Many of the underperforming shopping centres have either been demolished due to reasons such as developers undertaking residential or commercial developments or were permanently closed or auctioned. Inorbit Mall, Whitefield – Bengaluru, Moments Mall in Delhi and K Mall in Mumbai are examples of demolished malls.The study covered 340 shopping centres and 58 high streets across 29 Indian cities, conducted through primary surveys.Shishir Baijal, chairman & managing director, Knight Frank India, said the momentum of consumption, propelled by rising disposable incomes, a youthful demographic, and urbanisation, tilts in favour of the organised retail sector.
An enhanced retail experience remains crucial for shoppers, highlighting the significance of physical retail spaces.Grade A malls, he said, have notably excelled, maintaining robust occupancy, foot traffic, and conversion rates, thereby delivering value to their customers. Conversely, Grade C assets and those classified as ghost shopping centres are lagging, prompting landlords to take action to rejuvenate or divest such properties.
According to Knight Frank Research, as of 2023, India had a total shopping centre stock of 125.1 million sq ft. The top eight Indian cities constitute 75% of the total gross leasable area (GLA), admeasuring 94.3 million sq ft across 263 shopping centres while Tier 2 cities constitute 30.8 million sq ft. Of the top eight cities, NCR (31.3 million sq ft), Mumbai (16.3 million sq ft) and Bengaluru (15.6 million sq ft) were the top three in the pecking order of GLA available in the shopping centres.
Amongst the tier II cities, Lucknow (5.7 million sq ft), Kochi (2.3 million sq ft) and Jaipur (2.1 million sq ft) were the leading three cities in terms of GLA available in shopping centres. Lucknow has emerged as a key player with an impressive share of 18% GLA within Tier 2 cities.
