India’s Tier 1 cities are expected to see a surge in new mall development, with more than 16.6 million square feet of Grade A retail space likely to be added across the top seven urban markets between 2025 and 2026, according to a new report by real estate consultancy Anarock, published in the Hindustan Times.
Hyderabad and Delhi-NCR are set to lead the expansion, together accounting for nearly 65% of the upcoming supply. The report positions these cities as high-growth retail destinations, driven by sustained consumer spending and infrastructure readiness.
“This surge is also prompted by a shortfall in the new supply of Grade A malls across cities,” said Anuj Kejriwal, managing director and CEO of Anarock Retail. “The previous three-year data trends show that new mall supply in the top seven cities did not match overall leasing.”
In 2022, about 2.6 million square feet of new Grade A retail space was added in these markets, while leasing stood at approximately 3.2 million square feet. In 2023, supply increased to 5.3 million square feet, but leasing activity surpassed it again, reaching 6.5 million square feet.
India’s top seven cities—Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Pune, Chennai and Kolkata—will remain at the center of this retail expansion, the report noted.
Anarock estimates total mall leasing in these cities will exceed 12.6 million square feet over the next two years. The anticipated growth is being fueled by steady consumer demand and rising confidence among both mall developers and retail tenants.
Over the past four years, more than 60 international retail brands have entered the Indian market, spanning segments such as fashion, lifestyle, electronics, and food and beverages. Their arrival has further boosted the need for organized, high-quality retail spaces, particularly in malls and high-footfall high streets.
While Tier 1 cities dominate the mall development pipeline, Tier 2 and Tier 3 cities are rapidly emerging as key consumption centers. The report highlights that these smaller cities are benefiting from rising disposable incomes, increasing internet access, and greater smartphone penetration.
E-commerce adoption in Tier 2 and Tier 3 markets has now overtaken that of Tier 1 cities, accounting for 65% of India’s online shopping activity—a figure projected to settle at 64% by fiscal year 2030, as growth stabilizes.
India’s online shopper base has also expanded significantly, from 140 million in 2020 to nearly 260 million in 2024. It is expected to reach 300 million by 2030 and further swell to 700 million by 2035, the report added.
As the supply-demand imbalance begins to correct, mall vacancy rates in the top seven cities are forecast to stabilize. Vacancy is expected to fall to 8.2% in 2025 and 8.5% in 2026, compared to 15.5% in 2021.
“This retail transformation reflects a maturing market that is being shaped by both global trends and localized consumption shifts,” Kejriwal said.