As shopping malls across the US shut stores and struggle with rising vacancies, Indian retail real estate is heading into 2026 on a very different footing. Capital that once chased new developments is increasingly focusing on older shopping centres that had lost relevance but sit on valuable urban land.
This renewed interest is tied to how India’s retail and housing markets behaved through 2025, based on data from property consultancies and sector reports.
How 2025 set the base for retail real estate
Through 2025, organised retail market in India remained tight despite global uncertainty. According to ANAROCK Research, Grade-A malls across major Indian cities continued to operate at 95–100% occupancy, with limited availability in prime zones.
ANAROCK also pointed out that India faces a severe shortage of quality retail space. Grade-A mall stock stands at barely 0.6 sq ft per capita, compared with about 23 sq ft per capita in the US, a gap that continues to support demand for existing assets.
On the demand side, ANAROCK noted that India is moving towards a $6 trillion consumption economy by 2030, supported by urbanisation, rising incomes and a young population. This backdrop helped physical retail remain relevant through 2025.
At the same time, Knight Frank’s Think India Think Retail 2025 report drew attention to older, under-managed malls that lost relevance during earlier expansion cycles. Knight Frank identified 15.5 million sq ft of such underutilised or outdated shopping centre stock, commonly referred to as “ghost malls”.
Policy support cushioned sentiment
Government measures during 2025 helped stabilise broader real estate sentiment.
The Union Budget 2025–26 increased total expenditure by 7.4% to Rs 50.65 lakh crore, with infrastructure and urban development remaining key priorities. Revised income-tax slabs improved disposable incomes, indirectly supporting housing demand.
The government also allocated Rs 15,000 crore under SWAMIH Fund II to complete one lakh stressed housing units. In addition, the Rs 1 lakh crore Urban Challenge Fund and the National Geospatial Mission signalled a push towards institutional-grade urban development and digitised land records.
Sector consultants have noted that these measures strengthen long-term confidence across real estate segments, including organised retail that depends on stable urban catchments.
Housing slowed, but value moved up
Residential markets sent mixed signals through 2025.
According to ANAROCK Research, housing sales across the top seven Indian cities fell 9% year-on-year in Q3 2025, with about 97,080 units sold, compared with over 1.07 lakh units in the same quarter last year.
Despite lower volumes, the total transaction value rose 14%, from Rs 1.33 lakh crore to Rs 1.52 lakh crore, pointing to stronger traction at the premium and luxury end. ANAROCK attributed the volume slowdown partly to the monsoon season and the inauspicious ‘shraad’ period, while describing the housing market as reasonably steady overall.
Real estate consultants note that this divergence between volumes and value has pushed capital towards assets that offer predictable income rather than scale alone.
Why ‘ghost malls’ are drawing attention in 2026
1. Rs 357 crore locked inside dormant centres
Knight Frank noted that not all underperforming malls are beyond revival. According to the consultancy, selectively repositioning just 15 high-potential dormant shopping centres could unlock about Rs 357 crore in annual rental revenue. Many of these assets are well-located but misaligned with current demand.
2. India’s retail returns stand apart globally
The contrast with Western markets remains sharp. ANAROCK Research stated that the US has seen around 1,200 net mall store closures since 2020, driven by oversupply and declining footfalls.
In comparison, Grade-A retail assets in India typically deliver 14–18% internal rates of return, nearly double the yields available in several Western markets, according to ANAROCK.
3. New uses beyond shopping floors
Knight Frank’s Think India Think Retail 2025 report explained that many ghost malls are being repurposed rather than demolished. The consultancy noted that these centres are suitable for healthcare uses because their generous floorplates allow for OPD clinics, diagnostic labs, pharmacies and inpatient wards.
The same report stated that accessible urban malls are also being retrofitted into vocational institutes, coaching centres and skill-development hubs, particularly in land-constrained cities.
4. Physical retail continues to convert better
E-commerce has not displaced physical retail in India. According to ANAROCK Research, several direct-to-consumer brands report that offline conversions are two to three times higher than online. Physical stores are increasingly used for experience and trust-building, while digital platforms drive scale.
5. Tier-II cities enter the retail reset
The opportunity is expanding beyond metros. As per Colliers India, rising consumption and infrastructure-led connectivity are pushing organised retail into Tier-II and Tier-III cities.
Badal Yagnik, Chief Executive Officer and Managing Director of Colliers India, said that “2026 is set to reinforce India’s position as a future-ready and globally competitive real estate market”, with demographic and digital trends shaping demand.
6. A more selective cycle
The current phase is not about indiscriminate expansion. Ashwinder R Singh, Chair, CII Real Estate, has said the market is now “anchored in end-user demand, balance-sheet discipline, and delivery credibility”, adding that “sustainability, technology adoption, and governance will separate durable platforms from cyclical players.”
A ‘realty’ check: What the data indicates
India’s organised retail market continues to operate with a shortage of quality space. With Grade-A mall stock at just 0.6 sq ft per capita, scarcity remains a key support factor, according to ANAROCK Research.
As Shishir Baijal, Chairman and Managing Director of Knight Frank India, noted while discussing retail redevelopment, the focus is on “reconnecting rising consumer demand with underutilised retail infrastructure”, allowing older assets to find relevance again.
That combination of scarcity, stable consumption and selective redevelopment explains why global capital is increasingly focused on India’s ghost assets as 2026 approaches.
