Whalesbook
India's Retail Property Market Shifts Focus
India's retail property market is changing fast. In the latter half of 2025, 4.3 million square feet were leased across the seven major cities. This strong demand shows that physical stores are still important, but they are evolving. High streets are seeing faster rent growth and more brand interest. Malls, however, need to become more about experiences to stay popular.
Focus Shifts to Customer Experiences
Retailers are increasingly choosing high streets over malls not just by location, but as a strategy. With e-commerce growing, physical stores need to offer experiences that online shopping cannot. This means creating spaces for people to spend time, interact, and have unique encounters. Apparel, entertainment, and food businesses are leading this trend, as shoppers look for curated experiences. Many are signing leases for medium-sized stores (1,000–5,000 sq ft), aiming for a balance between store visibility, rental costs, and flexibility.
High Streets Attract Brands and Rent Growth
High streets are now performing better than malls, with rents rising in key areas. Strong shopper demand and a lack of good mall space are driving this. Brands in fashion, luxury, and food and drink are choosing high streets for expansion because they offer high visibility and attract steady foot traffic. Good public transport and parking also make them more attractive. High streets are also fitting into local neighborhoods, matching how people live in cities today.
Malls Need Experiences to Compete
Mall leasing is steady overall, but rent increases are mainly happening in top-tier Grade A malls. Older malls are facing high vacancies, with about 20% considered 'ghost malls' because they are outdated and lack appealing stores. This shows a clear difference in the market. Successful malls are becoming more than just shopping centers; they are turning into places for entertainment, dining, and leisure, offering many different attractions. Developers are also building mixed-use projects that combine retail with homes and entertainment for a complete lifestyle experience.
New Supply and Economic Drivers
Most new retail spaces are planned for Delhi NCR and Hyderabad, making up about 70% of future supply. This is linked to strong consumer spending, better infrastructure, and many new mixed-use developments in these areas. Generally, India's retail property market is supported by a strong economy, growing incomes, and an expanding middle class. Consumer spending on non-essential items has increased significantly, with credit card spending tripling by fiscal year 2024. These economic factors boost retailer confidence, despite global economic uncertainty.
Risks and Challenges Ahead
The performance gap between top high streets/malls and older retail properties creates a big risk. Old malls might become outdated quickly if they don't update their spaces, which is difficult due to scattered ownership and regulations. E-commerce growth, expected to reach $170-$190 billion by 2030, drives physical retail innovation but also pressures older formats. While the long-term economic outlook is strong, recent higher inflation and flat wages could slow consumer spending in the short to medium term, potentially affecting demand growth in 2026. Also, the large amount of new supply planned in some areas could lead to too much space if demand doesn't match or if new developments aren't distinct enough.
Outlook: Experiences Drive Future Success
India's retail property market looks promising, thanks to changing shopper tastes and developer strategies. Future success will hinge on creating appealing and unique spaces. While new high-quality malls are expected, the main growth will come from high streets and updated mixed-use projects that offer special experiences. Investors are putting money into the sector, showing confidence in its long-term prospects. Companies need to use local, flexible approaches and focus on experience-driven formats to succeed in this evolving market.