Tier 1 cities to see a surge of over 16 mn sq ft in mall supply between 2025 and 2026 amid rising consumption
Hyderabad and Delhi-NCR to lead growth, accounting for 65% of new mall supply. Tier I, II cities emerging as new consumption hotspots, said a report by Anarock
Rising consumer demand is driving a surge in new mall supply across Tier 1 cities, with over 16.6 million sq ft of Grade A retail space expected to enter the top seven cities between 2025 and 2026, according to real estate consultant Anarock.
Hyderabad and Delhi-NCR will lead this growth, accounting for 65% of the new supply, highlighting their status as high-growth consumption hubs, it said.
This retail boom is not limited to metros—Tier 2 and Tier 3 cities are also emerging as key consumption hotspots, driven by rising disposable incomes and increased smartphone and internet penetration. E-commerce adoption in these cities has now surpassed that of Tier 1 cities, accounting for 65% of online shopping—a share projected to reach 64% by FY 2030, it showed.
India’s online shopper base has also grown from 140 million in 2020 to nearly 260 million in 2024 and is expected to reach 300 million by 2030 and 700 million by 2035, the report said.
"The surge is also prompted by a shortfall in the new supply of Grade A malls across cities. The previous three-year data trends show that new mall supply in the top 7 cities did not match the overall leasing. In 2022, these cities witnessed about 2.6 msf of new Grade A retail supply, while leasing clocked in at about 3.2 msf. Likewise, 2023 saw 5.3 msf of new Grade A mall supply, while 6.5 msf were leased," Anuj Kejriwal, CEO and MD - ANAROCK Retail, said.
The top seven cities include Bengaluru, Kolkata, Mumbai, Pune, Delhi-NCR, Hyderabad, and Chennai.
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Mall leasing to cross 12.6 msf in the next two years
Anarock data estimates that total mall leasing over the next two years will cross 12.6 msf across the top 7 cities. This trend reflects growing confidence among both mall developers and retailers, supported by steady consumer demand and positive market sentiment.
"The strong leasing rate is also prompted by the entry of over 60 international retail brands in India over the last four years across categories like fashion, electronics, lifestyle, and food and beverages," said Kejriwal. "This has accelerated demand for high-grade organized retail spaces, particularly in high-footfall zones like malls and high streets."
Anarock data also indicates that with a demand-supply imbalance of previous years now gradually normalising, mall vacancy rates in the top 7 cities will stabilise over the next two years at 8.2% in 2025 and 8.5% in 2026. In 2021, the vacancy rate in these cities was as high as 15.5%.
