In a positive sign for the retail sector, retail space leasing in India experienced a remarkable 24% growth during the first half of 2023, according to a recent report by CBRE. The total retail space leased during this period reached an impressive 2.87 million square feet, up from 2.31 million square feet during the same period the previous year. Additionally, leasing activity saw a 15% increase compared to the second half of 2022.
Bengaluru, the National Capital Region (NCR), and Ahmedabad emerged as the top contenders, collectively accounting for a substantial 65% share of the retail leasing deals in the first six months of 2023. Among them, Bengaluru claimed the largest portion with a 35% share, followed by NCR with 24% and Chennai with 14%. Hyderabad also secured a notable 11% share in retail leasing during this period.
The report also highlighted a significant surge in mall supply, which more than doubled from 0.44 million square feet in the first half of 2022 to 1.09 million square feet during the same period in 2023. Ahmedabad was a leader in mall supply addition with a remarkable 73% share, while NCR accounted for 20% of the growth.
The increased appetite of shoppers was a driving force behind the 8% growth in mall completions across the top eight cities in India on a half-yearly basis. Consumers’ growing interest in retail spaces fueled the demand for high street stores and other commercial areas.
In terms of rental trends, select areas in Kolkata witnessed substantial growth. High street store rentals in west and east Kolkata rose by 10% to 15%, while Bhopal and Ahmedabad experienced rental growth of 9% to 13%. Rentals on Golf Course Road in Gurgaon increased by 4% to 8%, and 100 Feet Road, Indiranagar, in Bengaluru saw a rise of 1% to 4%.
The retail leasing activity during the second quarter of 2023 was dominated by fashion and apparel stores, which accounted for a significant 38% share. The food and beverage sector followed with an 18% share, while the luxury segment and home and department stores held an 11% share each. Consumer electronics accounted for 7% of the leasing activity during the same period.
Industry experts are optimistic about the retail sector’s future, with a promising outlook for the coming quarters. Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa at CBRE, expressed confidence in the market’s continued growth, driven by a robust supply pipeline and the upcoming festive season. He also noted the increasing traction in the luxury segment, anticipating the entry of more international brands across various categories.