2022 has been a spectacular year for India’s retail real estate segment. Improved shopping and socialising patterns among Indian consumers led to higher footfalls in the malls across cities. The marked increase in consumers shopping at malls also prompted brands and retailers to strengthen their physical presence.
Mall developers also witnessed healthy growth traction in the leasing activity. The improved sentiment amongst shoppers and buyers pushed demand for quality retail space across malls and high streets. According to a CBRE report, India witnessed an increase of 114 percent YoY in retail leasing between January and September 2022 while supply increased by 102 percent Q-o-Q in Q3 2022. Considering the growth momentum and the brand expansion plans, the sector anticipates a healthy new supply in the coming years.
Commenting on the same, Aman Trehan, Executive Director, Trehan Iris, said, “The phenomenal boost in the demand and supply of Grade A quality retail space is driven by the increased investment inflow, economic growth, rapid urbanization, changing consumer preferences, and positive market sentiments. Additionally, as consumers returned to regular shopping and socializing patterns in malls, retail space developers immediately geared up to respond to improving footfalls. This return to normalcy further encouraged brand expansion, resulting in impressive retail leasing trends. If the current pace continues, we can expect a record year for retail leasing ahead.”
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Shopping malls are witnessing high occupancy levels, and the demand for more organised retail space has intensified. New records are expected to be set in 2023 due to a spike in retail space demand.
Kunal Rishi, Spokesperson, Paras Buildtech, said, “2022 was a high point for the real estate business, as developers and investors expressed remarkable enthusiasm. The retail real estate sector has evolved through several phases to become one of the most dynamic and quickly expanding businesses. A radical change in consumer behaviour and more significant real estate investment are the fundamental causes of the gains.”
2022 was also a record year for Delhi-NCR’s retail segment. According to CBRE India, the retail segment in the region has surpassed pre-pandemic levels, and domestic brands primarily drive this growth. In terms of retail space take-up, Delhi-NCR accounts for more than 70% of overall leasing activity.
Vinay Wadhwa, General Manager – Sales, Vatika Limited, said, “India’s retail realty segment witnessed a surge in retail leasing this year. In Delhi-NCR, Gurugram led the way in retail leasing among top Indian cities. Furthermore, leasing activity in Delhi-NCR has surpassed pre-pandemic levels, driven by the expansion spree of both domestic and international brands. With so many potential real estate investment opportunities redefining the property market, we expect 2023 to be even more impactful. If current growth trends continue, the country’s real estate sector may experience explosive growth next year.”
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The retail sector in Gurugram and its micro-markets witnessed promising growth trends this year. The city has become a hotbed of leading activities this year, with brands making their way into the region, driving developers to launch new retail spaces. The retail segment in these regions will gain further momentum in 2023, driven by the upbeat sentiments of investors, developers, and consumers.
Kaustubh Chandra, Manager, Marketing and Leasing, Brahma Group, said, “Gurugram’s commercial and retail real estate segments are gaining substantial traction. According to a CBRE report, retail leasing in India during the first nine months of 2022 increased by 114% compared to the last nine months of 2021. With retailers regaining confidence and planning expansions, the retail realty segment has displayed an optimistic outlook. As 2023 draws closer, the anticipation of investors and industry players is at a new level as they expect the sector to set new standards and achieve significant milestones in 2023.”
Besides metros, the growing population of aspirational consumers is catapulting the retail sector’s growth in smaller cities and Tier 2 & 3 markets. Retailers and brands are exploring the possibilities in Tier 2 & 3 cities creating a demand for retail spaces. The rapidly enhancing infrastructure, employment opportunities, and relatively lower cost of living are supporting the growth of the retail sector in smaller cities. The growth of the retail sector will likely be driven by smaller cities in the coming years.
In light of the current upbeat sentiments, it seems reasonable to assume that 2023 will bring even more reasons to cheer for developers and investors as more iconic retail spaces will be launched, driving retail leasing activity to a new peak.