Demand for retail space may dip up to 15% in 2024
Leasing of retail spaces in shopping malls and high street locations across 8 major cities is expected to sustain between 60-65 lakh sq ft in 2024, when compared to 71 lakh sq ft in 2023, says CBRE report
image for illustrative purpose
Demand for retail spaces in shopping malls and high-street locations may decline up to 15 per cent this year from a record 71 lakh square feet in 2023 calendar year with retailers being cautiously optimistic, according to CBRE.
Leasing of retail spaces in shopping malls and high street locations rose 48 per cent to 71 lakh (7.1 million) square feet in 2023 across eight major cities as against 48 lakh (4.8 million) square feet during the 2022 calendar year. In its report '2024 India Market Outlook', real estate consultant CBRE has projected that the leasing of retail space is expected to sustain between 6-6.5 million (60-65 lakh) square feet in 2024. It also expects a stable supply of retail spaces on completion of numerous high-quality mall developments. Around 5-6 million (50-60 lakh) square feet of investment-grade mall space will become operational in tier-I cities, the consultant said. Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "Driven by robust consumer demand, India's retail sector saw remarkable growth in 2023. Looking ahead to 2024, both retailers and consumers are cautiously optimistic."
While tier-I cities remain key expansion hubs, promising tier-II markets are attracting new players, he added. "Malls are transforming into experiential centres, offering a mix of entertainment, dining, and shopping. Fuelled by pent-up demand and strategic expansion, India's luxury retail is experiencing a leasing boom, attracting both established brands deepening their presence and new international players entering the market. This expansion reaches beyond Delhi and Mumbai to the newer markets like Hyderabad and Ahmedabad," Magazine said.
In 2024, among the retail categories, the home décor segment is likely to expand in online and offline formats, while fashion and apparel players will continue expanding in tier-I cities across malls and high streets. Domestic jewellery brands are also expected to continue to expand. The growing interest of consumers in the entertainment category is likely to lead to more traction in leasing as well. The report indicated that retailers, including anchor tenants and established brands, would be cautious with expansion plans.
"They (retailers) will prioritise locations with high visibility, strong foot traffic, and favourable consumer demographics. As a result, rental growth is expected to rationalise across both primary and secondary locations," the report said. Moreover, while well-established domestic brands with a solid presence are likely to proceed cautiously with their expansion plans, international newcomers aiming to establish themselves, especially in tier-I cities, are anticipated to persist with their expansion strategies despite global economic challenges.
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, "Foreign luxury retailers are entering India through partnerships with local players. The upcoming launches of a few brands underline this trend."
