The retail leasing market in the Delhi-NCR region has witnessed a significant surge of 65% during the initial six months of 2023, marking a substantial increase from the 420,000 square feet recorded in the corresponding period last year. This revelation comes from a recent report released by CBRE South Asia, a prominent real estate property consultancy, shedding light on the vibrant dynamics of the retail real estate sector in the area.
The report, titled “India Retail figures H1 2023,” underscores the pivotal role played by renowned brands in driving this growth. Leading the charge was the clothing brand Twamev, securing 10,000 square feet of retail space in South Extension II. Following suit was tech giant Apple, opening an expansive 8,800 square-foot store in the Select City Walk Mall, Saket. Additionally, the coffee and sandwich chain Pret A Manger sealed a deal for 1,160 square feet of space within the same mall. This leasing upswing was notably steered by fashion and apparel enterprises, commanding a significant 47% share, closely trailed by luxury brands at 13%, and the food and beverage sector, which accounted for 8% of the leasing.
On a national scale, retail leasing demonstrated robust year-on-year growth of 24% during the January-June timeframe. This translated to a 15% increase compared to the preceding July-December period. The total leased area for this period reached 2.90 million square feet, a substantial rise from the 2.31 million square feet observed the previous year. Notably, the cities of Bangalore, Delhi-NCR, and Ahmedabad collectively contributed to a remarkable 65% share of the national leasing activity in the first half of this year.
The report further accentuated an 8% upswing in mall completions across India’s top eight cities, underscoring the mounting interest from consumers. Moreover, the Indian market experienced the entry of several international brands over the past six months. Apple’s foray into the Indian market was marked by the launch of its inaugural stores in Mumbai and Delhi-NCR. The UK-based Pret A Manger also made its entry into the Indian landscape with outlets in Mumbai and Delhi-NCR. Additionally, Canadian coffee brand Tim Hortons, which marked its Indian debut the previous year, expanded its presence in Delhi-NCR and Punjab, and ventured into the Mumbai market in 2023.
Significantly, renowned luxury brand Balenciaga is poised to establish its inaugural brick-and-mortar store in Delhi-NCR through a partnership with Reliance Brands. Adding to the retail panorama, Paris-based Galeries Lafayette, a distinguished shopping center, is gearing up to introduce two stores in Mumbai and Delhi-NCR, in collaboration with Aditya Birla Fashion and Retail Ltd.
Anshuman Magazine, the Chairman and Chief Executive Officer (CEO) for India, South-East Asia, Middle East & Africa, conveyed an optimistic sentiment from retailers, highlighting their eagerness to expand operations and enhance their existing establishments. Looking ahead, the anticipated growth in mall supply, coupled with a positive trend in consumer spending, especially during festive seasons, is expected to reinforce the momentum for expansion among both international and domestic retailers well-positioned in the market.
As 2023 draws to a close, the retail leasing sector is projected to reach levels ranging between 5.5 and 6 million square feet, a peak not seen since the apex of 6.8 million square feet reached in 2019. The report also anticipates that primary leasing in newly completed malls will remain a driving force behind retail space demand in 2023. Notably, rental values in select micro-markets across most cities have been on the rise, propelled by a strong demand for quality retail spaces. Additionally, tier-II cities are expected to garner more attention as retailers recognize the untapped potential present in these markets.
In summary, the retail leasing resurgence in Delhi-NCR in 2023 is underpinned by prominent brands and a promising trajectory in India’s wider retail sector. This trend reflects the evolving preferences and spending patterns of consumers, heralding a potentially prosperous year ahead for the retail real estate industry.