India’s retail boom to attract USD 3.5 billion over next three years: ANAROCK

As shopping malls across western economies grapple with falling footfalls and rising closures India is emerging as a bright spot on the global retail investment map Indian shopping malls are expected to attract more than USD 35 billion in capital inflows over the next three years according to data from ANAROCK Research amp AdvisoryWhile the United States US has seen a net closure of nearly 1200 mall stores since 2020 with rising vacancies forcing close to 40 per cent of empty malls to be rezoned or repurposed Indiarsquos retail sector is witnessing a sharp resurgence The revival is being driven by strong consumer demand favourable demographics and growing confidence among institutional investorsAnuj Kejriwal the chief executive officer of retail leasing and industrial amp logistics at ANAROCK Group said Indian retail continues to defy global trendsldquoLatest ANAROCK data shows that in the next three years Indian malls are set to see over USD 35 billion of capital inflows Meanwhile over 88 foreign brands have entered the Indian retail market and are seeking to expand aggressively Several more global brands are in the pipeline scouting for space in the severely restricted GradeA assets currently availablerdquo he saidBetween 2021 and the first nine months of 2025 more than 88 international brands entered Indiarsquos retail market Many of them are actively seeking space in GradeA malls which remain in acute short supply across major citiesIndiarsquos per capita retail stock remains among the lowest globally TierI cities offer only 4ndash6 sq ft of retail space per person while TierII and TierIII cities have just 2ndash3 sq ft per capita GradeA mall space stands at barely 06 sq ft per person compared to nearly 23 sq ft in the US and over 6 sq ft in ChinaldquoThis gap combined with Indiarsquos per capita income nearly doubling over the last decade has created a demandsupply mismatch virtually unheard of in global retailrdquo Kejriwal said ldquoGradeA malls are operating at nearfull occupancy with 95ndash100 per cent leased space and long waitlists in key zones Leasing cycles are now outpacing construction cycles which is extremely rare globallyrdquoConsumptionled growth storyIndia is projected to become a USD 6 trillion consumption economy by 2030 powered by a young population rising disposable incomes and rapid urbanisationUnlike their western counterparts Indian malls function as lifestyle and social destinations anchored by entertainment dining and experiential offeringsDaily footfalls at large Indian malls often exceed 20000 on weekdays and cross 40000 on weekends Food and beverage outlets and entertainment zones account for 30ndash35 per cent of total footfalls making Indian malls relatively resilient to online retail disruptionsStrong investor appetiteDespite having over 600 operational malls fewer than 100 in India qualify as institutionalgrade assets intensifying competition for highquality retail propertiesKejriwal said Blackstonersquos Nexus Select Trust REIT listing in 2023 marked a significant milestone for retailled real estate investment trusts in India The REIT includes 19 malls housing more than 1000 brands and generates around Rs 1600 crore in annual net operating incomeldquoBy 2030 at least two more retail REITs are expected to enter the Indian marketrdquo he saidEcommerce not a threatUnlike in western markets ecommerce has not weakened physical retail in India With online retail penetration at around 8 per centmdashfar lower than in the US and Chinamdashbrands are increasingly adopting a lsquophygitalrsquo approach combining physical stores for experience and trust with digital platforms for scaleSeveral directtoconsumer brands report offline conversion rates that are two to three times higher than online sales underscoring the continued relevance of brickandmortar retailHigh returns attract global capitalIndian GradeA retail assets typically offer internal rates of return IRRs of 14ndash18 per cent nearly double the yields seen in many western markets Rental escalations revenuesharing models linked to consumption growth and consistently low vacancy levels continue to draw global investorsldquoIn contrast to the US and Europe where malls are battling oversupply and declining footfalls India offers limited quality supply rising incomes and expanding brand presencerdquo Kejriwal said ldquoIn the first half of 2025 retail leasing in India grew nearly 70 per cent yearonyear while new mall supply rose by over 160 per centrdquo