Consumer confidence and brand expansion fuelling growth in India’s retail space segment – JLL Report

Retail space leasing is currently experiencing a notable surge driven by positive sentiments and promising trends. With a robust supply pipeline, the influx of international brands in various categories, and the upcoming festive season, the retail sector is buoyant. Besides, the resurgence of consumer sentiment, an increase in consumption appetite, and the widespread adoption of omnichannel strategies by retailers are likely to further propel the growth graph.

Highlights from the report- 

• A report from JLL India projects a substantial increase in new retail space supply for India. It estimates that the retail space sector will see over 38 million square feet of supply between the second half of 2023 and 2027 across the country’s top seven cities.

According to the survey, since 2021, 24 new international brands have arrived in India, rushing to Grade A malls across Delhi NCR, Mumbai, and Bengaluru.

• As of H1 2023, there were 89 million square feet of operational retail space spread across the top seven cities (Delhi NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai, and Hyderabad).

Abhishek Trehan, Executive Director, Trehan Iris, says: “Demand for Grade A retail space is booming across cities, driving exceptional leasing activity. It is no wonder that India remains a top choice for global brands. Increased institutional participation, and strategic synergies between retailers and governments’ supportive policies are creating a highly conducive business environment. The retail space segment is set to witness robust supply growth in the years ahead across India’s top cities, with developers focused on creating innovative spaces at flourishing locations to intrigue investors, retailers, and brands. Industry analysis highlights Delhi-NCR as a thriving market for the retail industry, with 31 percent of the new supply anticipated to come in Delhi-NCR. Emerging locations in NCR, such as New Gurugram and Greater Noida West, hold immense potential to become preferred Grade A retail destinations. With strategic locations, improved connectivity, and physical and social infrastructure, New Gurugram and Greater Noida West are realty hotspots to watch out for in the coming years in the commercial and retail segment.” 

Delhi-NCR is considered one of the top retail destinations in India due to its advantageous location. The area is home to multiple businesses, corporate headquarters, and government offices, and boasts well-planned infrastructure and connectivity, all of which have contributed to an increase in commercial activity in the city and its surrounding areas. The growth in the urban population and the working class has further fuelled the demand for retail space.

Another report on industry trends by CBRE, “India Market Monitor Q2 2023” highlights the following-

• A substantial increase in the leasing of retail properties in India during the first half of 2023. Compared to the same period in the previous year, there was a 24 percent surge in leasing activity, with a total of 2.87 million sq ft being leased from January to June. Delhi-NCR, Bangalore, and Ahmedabad accounted for 65 percent of the activity.
• Total leasing for the quarter that ended on June 30 was 1.3 million square feet. Together, Bangalore and Delhi-NCR accounted for 59 percent of the lease of retail space. Delhi-NCR has a significant 24 percent share of all leases during this time.
• Fashion & clothing drove leasing activity during the quarter, accounting for 38% of total lease activity. The food and beverage sector held an 18% share, while the luxury and home & department store sectors each held an 11% share.

Kaustubh Chandra, Manager – Marketing & Leasing, Brahma Group says “The demand for high-quality retail space is rapidly increasing in cities, leading to a significant rise in retail leasing. According to the CBRE report, there has been a surge in leasing activity in NCR, including high streets, Grade A malls, and standalone developments. In the first half of 2023, Delhi-NCR witnessed a 65% increase in retail leasing, driven by strong demand. With positive sentiments prevailing and the festive season approaching, we expect retail space leasing and demand to reach new heights. Gurugram, with its strategic location and well-planned infrastructure, is becoming a growing hub for retail and commercial activities, attracting retailers, brands, and investors, and ensuring sustained growth in the city’s retail space landscape.”

As the economy continues to improve and consumers become more confident, businesses are looking to increase their physical retail presence. A significant trend is the desire for high-quality retail spaces. Brands are searching for spaces that are well-designed, easily accessible, and strategically located, as they provide the perfect setting to showcase their products and interact with customers in a meaningful way.

Navdeep Sardana, Founder, Whiteland Corporation says “According to recent surveys, the retail real estate market in India is on the cusp of remarkable growth. In this landscape, Gurugram stands out with a positive and dynamic approach towards retail development. The city’s flourishing economy and its proximity to Delhi make it an attractive destination for retailers and investors alike. As we move forward, Gurugram’s commitment to innovation and strengthening consumer connections aligns perfectly with the evolving demands of the retail sector. The surge in foot traffic in malls, especially post-COVID-19, underscores the growing demand for quality retail spaces, reaffirming Gurugram’s position as a key player in India’s evolving retail landscape.”

To ensure sustained growth, the retail industry must be able to adapt to changing consumer preferences. In today’s market, shoppers are looking for unique experiences that go beyond just buying products, and retailers are responding with innovative store concepts that integrate entertainment and socializing. This trend, along with other factors that have reignited consumer interest and retail activity, is expected to drive continued growth in the industry.