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India’s retail space surges 47% | Image:Unsplash

Record retail growth: India witnessed an upswing in the retail leasing sector, reaching a historic high of 7.1 million sq ft across the top 8 cities, according to a CBRE report. This surge reflects a 47 per cent year-on-year (YoY) increase, underscoring the resilience of the consumer market and signalling heightened interest from retailers for new setups, expansions, and store upgrades.

The total retail supply reached a peak of 6 million sq ft, marking a 316 per cent YoY increase. This surge can be attributed to the commencement of operations of 12 investment-grade malls across key cities, playing a role in shaping the overall retail space occupancy during the year.

Fashion-led retail boom

​Fashion & apparel emerged as the driving force behind the surge in retail leasing during 2023, constituting approximately 32 per cent of the total leasing. This dominance was largely influenced by mid-range fashion value and athleisure brands. Following closely were homeware & department stores with a 17 per cent share, while food & beverage, luxury, and consumer electronics claimed 12 per cent, 9 per cent, and 6 per cent shares, respectively, in the overall leasing activity throughout the year.

City-wise, Mumbai and Pune recorded a 5-year high in leasing at 1.0 and 0.8 million sq ft, respectively, while Bangalore, Ahmedabad, Delhi-NCR, Kolkata, and Hyderabad witnessed steady leasing activity. The retail leasing trend during July to December 2023 was particularly notable in tier-I cities, with a 67 per cent YoY increase, totalling 4.2 million sq ft Bangalore led the leasing activity, closely followed by Mumbai and Pune, contributing to nearly 64 per cent of the total absorption during this period.

Global giants invest

The retail sector also witnessed key investments in 2023, with significant deals such as QIA’s $1.01 billion investment in Reliance Retail, ADIA’s $598 million in Reliance Retail, and an undisclosed investor’s $420 million investment in PharmEasy. Foreign retailers continued to enter the Indian market through local partnerships, with notable expansions by La Vie en Rose, Rimowa, Bugatti Fashion, and Victoria’s Secret during the latter half of 2023.

Providing insights into the future outlook, Anshuman Magazine, Chair & CEO, CBRE, expressed optimism, saying, “As we navigate global challenges, the resilient discretionary spending and robust retail consumption, coupled with easing inflationary pressures, is propelling retail leasing activity.”

Ram Chandnani, Managing Director, CBRE India, highlighted the transformative shift in tier-II cities, where sectors such as fashion & apparel, homeware, entertainment, and hypermarkets are commanding over 70 per cent of leasing activity.

Retail 2024: Luxury & tech rise

Looking ahead to 2024, the retail sector is expected to maintain its momentum in tier-I cities, driven by the completion of newly constructed malls. The luxury sector is gaining traction, with international brands expected to strengthen their presence. Retailers will focus on innovation in in-store experiences, with an emphasis on technological upgrades and personalised services. However, the industry is cautious about consumer spending patterns in the face of high inflation, and retailers are likely to explore tier-II cities and other markets to tap into high-potential areas for brand expansion and customer engagement.