Retail leasing hits highs, surpassing 7.1 million sq. ft. across India's premier cities in 2023

New Delhi [India], January 24 : CBRE South Asia Pvt. Ltd has unveiled the 'India Market Monitor Q4 2023' report, revealing a surge in the country's retail sector.
According to a media release, in 2023, retail leasing reached an all-time high, totalling 7.1 million sq. ft. across eight major cities, marking a 47 per cent year-on-year increase.
This surge reflects India's status as a burgeoning consumer market, attracting retailers keen on establishing new setups, expanding existing operations and upgrading stores.
The report underscores the role of recently completed malls, contributing to 30 per cent of total absorption, in shaping the landscape of retail space occupancy during the year.
Additionally, the retail supply witnessed a peak at 6 million sq. ft. in 2023, experiencing 316 per cent year-on-year growth.
This significant rise in supply is attributed to the commencement of operations in 12 investment-grade malls across key cities like Bangalore, Pune, Mumbai, Hyderabad, Ahmedabad, Delhi-NCR, and Chennai.
During the Jul-Dec '23 period alone, nearly 4.9 million sq. ft. of new retail space became operational in major cities.
The retail sector in India experienced a notable surge in leasing activity in 2023, with Mumbai and Pune reaching a five-year high at 1.0 and 0.8 million sq. ft., respectively.
Other cities like Bangalore, Ahmedabad, Delhi-NCR, Kolkata, and Hyderabad also witnessed steady leasing activity during the year.
Fashion and apparel emerged as the driving force behind the retail leasing surge, claiming a substantial 32 per cent share in total leasing.
This surge was largely influenced by mid-range fashion value and athleisure brands. Following closely were homeware and department stores, accounting for a 17 per cent share.
Food and Beverage claimed a 12 per cent share, luxury at 9 per cent, and consumer electronics at 6 per cent in overall leasing during 2023.
The period of Jul-Dec '23 saw a notable increase in space uptake across tier-I cities, witnessing a 67 per cent year-on-year increase, totalling 4.2 million sq. ft.
The leasing trend during this period experienced a significant uptick of 43 per cent compared to the Jan-Jun '23 period when leasing stood at 2.9 million sq. ft. Bangalore led the leasing activity, followed by Mumbai and Pune, contributing to nearly 64 per cent of the total absorption in Jul-Dec '23.
Anticipation of increased mall supply and favourable consumer spending patterns is expected to encourage expansion among both international and domestic retailers in the future.
Jul-Dec '23 recorded a substantial increase in supply across tier-I cities, showing a remarkable 389 per cent year-on-year growth.
The report also highlights key retail investments in 2023, with investors like QIA and ADIA making substantial contributions to Reliance Retail.
E-commerce also saw notable investment, with an undisclosed investor injecting funds into PharmEasy, and KKR investing in Reliance Retail.
Foreign retailers continued to strategically enter the Indian market through local partnerships. La Vie en Rose, a Canadian lingerie retailer, made its debut in India in partnership with Apparel Group India, launching its first store in Delhi-NCR in July 2023 and later expanding in Pune and Bangalore.
Similarly, Rimowa, a German luxury luggage brand, entered India through a partnership with Reliance Brands, opening its first store in Mumbai.
Other significant expansions by international players include Bugatti Fashion and West Elm opening stores in Pune, and Victoria's Secret expanding its presence in Hyderabad and Pune during the Jul-Dec '23 period.
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East and Africa, CBRE, said, "As we navigate global challenges, the resilient discretionary spending and robust retail consumption, coupled with easing inflationary pressures, is propelling retail leasing activity. In 2023, retail leasing in tier-I cities surged to 7.1 million sq. ft., surpassing the 2019 peak".
He added, "Constituting around 30 per cent of overall absorption, newly completed malls are pivotal in the total leasing momentum. Key sectors like fashion & apparel, homeware, department stores, food & beverage, entertainment, and luxury are driving this growth. The luxury sector, which saw a 162 per cent increase in 2023, shows a promising trend with the entry and expansion of international brands. This positive momentum is expected to continue, aligning with our anticipation for a similar trend in the years ahead."
Ram Chandnani, Managing Director, Advisory and Transaction Services, CBRE India, said, "As retail leasing in major tier II cities of India (Chandigarh, Lucknow, Jaipur, Indore and Kochi) surges to 1.2 million sq. ft. in 2023, we witness a transformative shift led by sectors such as fashion & apparel, homeware, entertainment, and hypermarkets, commanding over 70 per cent of leasing activity".
He added, "The increased demand for organized retail spaces has attracted leading developers and institutional players to these markets, evolving retail formats from vanilla stores to shopping malls, department stores, hypermarkets, and dedicated entertainment zones. Notably, cities with tourism and spiritual significance are becoming focal points as retailers seize the opportunity to establish a presence, enhance brand awareness, foster customer interactions, and create immersive in-person shopping experiences. The trajectory indicates a promising future for retail expansion and innovation in these dynamic markets."
Looking ahead to 2024, CBRE anticipates steady primary leasing, strengthened luxury brand presence, a focus on innovative in-store experiences, and exploration of tier-II and spiritual tourism markets.