Propelled by increasing domestic consumption and favorable economic circumstances, the Indian retail industry is poised for a major transformation, Nevertheless, there is a pressing need for a considerable expansion of premium retail spaces to satisfy the escalating demand, as per a recent report by Cushman & Wakefield.

In order to meet the increasing demand and to be comparable with other South Asian nations regarding Retail Space Per Capita (RSPC), India is required to develop around 55 million square feet (MSF) of Grade-A mall space over the next four years. RSPC is calculated by dividing Grade-A mall space by the population, and India currently lags in this metric.
Speaking about the same, Aditya Kushwaha, CEO and Director of Axis Ecorp, said, “The rise in retail space leasing is a strong indicator of India’s evolving consumer landscape and the robust health of our real estate market. We see this trend having a cascading impact—boosting demand for commercial infrastructure, driving urban development, and enhancing retail ecosystems. This momentum also fuels the growth of ancillary sectors such as logistics, hospitality, and technology. The development of modern, integrated spaces will be key to catering to the dynamic needs of retailers and consumers alike, ensuring sustainable growth across India’s real estate and economic sectors.”

Changing Consumer Trends Fuel Retail Growth

A significant shift in consumer behaviour is driving this demand. Urban consumers are spending more on discretionary items and experiences. Data shows discretionary spending increased from 27% in FY2011-12 to nearly one-third in FY2022-23 while spending on essentials has decreased. Moreover, there has been a noticeable rise in monthly expenditures on food delivery and credit card transactions, signalling greater consumer confidence. Indians are also investing more in travel, premium consumer goods and vehicles. This reflects a shift towards aspirational spending.

Amrita Gupta, Director, Founder President, CREDAI Rajasthan Women’s Wing, stated, “The consistent rise in demand for retail space leasing underscores the evolving preferences of consumers and the resilience of the retail sector. This trend is expected to sustain momentum, driven by a growing appetite for experiential and lifestyle-oriented retail formats. As high streets and malls expand to accommodate this demand, the focus will remain on creating versatile spaces that meet modern retail needs. The year ahead promises continued growth, with developers and stakeholders leveraging this demand to innovate and enhance the retail ecosystem nationwide.”

Mohit Goel, MD, Omaxe Ltd, said, “The growth in retail leasing across malls and high streets highlights a fundamental shift in India’s retail industry, where experience-driven spaces are taking center stage. Consumers today are seeking more than just a shopping destination — they desire vibrant hubs that blend retail, entertainment, and lifestyle seamlessly. At Omaxe, we are committed to shaping this trend further with projects like World Street in Faridabad, a thriving hub that redefines high-street retail, and The Omaxe State, which will feature India’s first air-conditioned high-street retail area. These developments are designed to offer a seamless blend of shopping, entertainment, and lifestyle experiences. As India’s urbanization accelerates and discretionary spending rises, the need for well-planned retail destinations that offer unique experiences will only intensify, and we are committed to being at the forefront of this change.”

Retail Space Demand in Key Cities

The growing appetite for premium retail spaces is most evident in eight cities: Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, and Ahmedabad. Hyderabad, in particular, has shown remarkable growth. The city’s high-street retail locations saw 1.72 MSF of leasing activity from January to September 2024, up from 1.60 MSF during the same period in 2023.

India’s Growing Appeal to Global Brands

India’s retail market is attracting a rising number of international brands. According to AT Kearney’s Global Retail Development Index 2023, the urgency for global retailers to enter India is at an all-time high due to macroeconomic growth, improved infrastructure, and government support. The number of international brands entering India annually has more than doubled, increasing from 12 before the pandemic to 25 in 2024. This growing interest is further driving demand for premium retail spaces.

Challenges in Retail Space Development

Despite strong demand, the pace of developing Grade-A retail spaces remains slow. Over the last eight years, only 20 MSF of Grade-A mall space has been added, averaging 2.5 MSF annually. The first half of 2024 saw no new mall supply, underscoring the sluggish pace of growth. India’s total Grade-A mall inventory across the top eight cities currently stands at 61 MSF, equating to a mere 0.5 square feet of RSPC—much lower than in smaller nations like Indonesia, the Philippines, and Vietnam. Low mall penetration has led to record-low vacancy rates in existing Grade-A malls, highlighting the need for accelerated development.

The retail sector in India is at a turning point, with immense potential to evolve into a leader in the global retail market. While rising consumer spending and international interest are driving demand, the lack of sufficient Grade-A retail spaces poses a significant challenge. To unlock the sector’s full potential, stakeholders must prioritise the timely development of premium retail infrastructure. A collaborative approach, supported by favourable policies, could bridge this gap, ensuring that India’s retail sector evolves to meet both domestic and global expectations.