Third Largest in India 15.2 Mn Sq Ft Operational Mall Stock in Bengaluru: Knight Frank India

Knight Frank India, a renowned international property consultant, in its latest report ‘Think India, Think Retail 2022’ cited Bengaluru recorded 15.2 mn sq ft of gross leasable area as of H1 2022; 16.5% of the total mall stock across top eight cities in India. Gross leasable area across 271 operational malls in top 8 cities in India stood at 92.9 mn sq ft as of H1 2022. A significant growth from 77.4 mn sq ft of gross leasable area until Dec 2019 registered across 255 malls in India.

Grade-wise mall stock distribution in Bengaluru, Grade B malls comprised a maximum share of 50% of the total mall stock in the city with 7.6 mn sq ft as of H1 2022. Grade A and C malls comprises a share of 42% (6.38 mn sq ft) and 8% (1.21 mn sq ft) of the total mall stock respectively.

As per the grade-wise mall stock distribution in top eight cities in India: Grade A malls contributed 39% of the total stock with 36 mn sq ft in H1 2022. High occupancy, strong tenant mix, good positioning and active mall management being the key driving factors. Grade B mall stock, with decent occupancy and tenant mix, contributed 31% with 29.1 mn sq ft. Grade C malls contributed the lowest 30% (nearly 27.8 mn sq ft) during the same period. High vacancy rates, poor tenant mix, and relatively poor mall management impacted the contribution by Grade C malls. Of the total number of 271 operational malls in India, Grade A comprised of 52 malls accounting to 19%. Grade B and C comprised of 35% (94 malls) and 46% (125 malls) respectively.

GROSS LEASABLE AREA & GRADE WISE DETAILS OF THE 271 MALLS ACROSS TOP 8 CITIES IN INDIA

Note: *By Gross Leasable Area at the end of H1 2022

Source: Knight Frank Research

Sharing an overview on the ‘Mall Culture’ in India, Shishir Baijal, Chairman & Managing Director at Knight Frank India said, “The retail real estate sector has reached a new level of maturity where smaller sized and lower grade developments are giving way to Grade A malls. The existing Grade A malls have over 95% occupancy which is indicative of the demand for quality real estate in this segment. Given that retail malls are experiential, more of the future developments will want to create destinations. Therefore, scale and quality of development would require developers to specialise in shopping centre development and operations. Like the office segment, post consolidation, retail real estate too will offer great opportunity for investments including REITs in the future.”

Outlook on Organized Retail Sales Volume and Consumption in Shopping Malls in India

As per the report, between FY 2017-2022, sales volume in organised retail sector grew at a CAGR of 24% reaching USD 52bn in FY 2022 across top 8 cities in India. Furthermore, in the six years period between FY 2022 – 2028 organised retail sales volume is projected to grow at a CAGR of 17% reaching USD 136 bn in FY 2028.

Between FY 2017 – 2022, consumption in shopping malls across top 8 cities in India grew at a CAGR of 3% and stood at USD 8 bn in FY 2022.In FY 2023, the potential consumption is estimated to cross the pre COVID-19 levels reaching USD 11 bn. In the long term, the potential consumption in Indian malls is forecasted to grow at a CAGR of 29% in between FY 2022 – 2028 and is estimated to be at USD 39 bn in FY 2028.

    FORECAST OF ORGANIZED RETAIL SALES (USD BN)                                      FORECAST OF POTENTIAL CONSUMPTION IN

                                         MALLS ACROSS TOP 8 MARKETS (USD BN)*

Source: Knight Frank Research

Note: FY 2023P, FY 2028P denotes the projected size by FY 2023, FY 2028