Mumbai, 4th October 2025: India’s retail real estate sector is undergoing a remarkable transformation — from fragmented, quantity-driven growth to a more consolidated, quality-led, and institutionally backed market. According to ANAROCK Research, of the 650 operational malls across the country today, a growing share now meets institutional-grade standards, signalling a shift towards a more mature and investment-ready retail landscape.
This shift is led by top players like Nexus Malls (Blackstone), Phoenix Mills, DLF, Lakeshore, Raheja Group, and Pacific, who collectively own 58 malls spanning 34 million sq. ft., with 45+ new projects covering over 42.5 million sq. ft. in the pipeline over the next 3–5 years.
“It’s impressive how institutional investments are expanding beyond metros into Tier 2 cities,” said Anuj Kejriwal, CEO & MD of ANAROCK Retail. “Cities like Chandigarh, Indore, Surat, Bhubaneswar, and Coimbatore are fast emerging as organized retail hubs, driven by rising aspirations and purchasing power.”
Kejriwal added that the evolution of Indian retail is increasingly shaped by consumer demand for standardized, experiential spaces, which aligns with the interests of private equity and REIT investors.
Quality Rising, Vacancies Falling
In 2015, top-grade malls made up a small portion of total retail stock in major cities. By 2027, these high-quality assets are projected to dominate the market. At the same time, vacancy rates in quality malls have declined significantly — a strong indicator of rising demand and better asset performance.
“Grade A properties are now witnessing 5–8% annual rental growth, far outpacing their Grade B and C counterparts,” said Kejriwal. “Underperforming malls are increasingly facing closure, repositioning, or conversion into mixed-use developments.”
Despite this progress, India still lags developed markets, with only 110 million sq. ft. of quality retail stock, compared to 700+ million sq. ft. in the US and 400+ million sq. ft. in China, where retail assets are predominantly institutionally owned.
However, India’s rapid urbanization and strong retail productivity — averaging INR 1,200–1,600 per sq. ft. per month in Grade A malls — point to massive future potential. New malls are now averaging over 1 million sq. ft. in size, setting the stage for increased REIT activity and more ‘bigger, better, branded’ developments.
GST Reforms Fuel Institutional Retail Growth
Recent changes in India’s GST regime, implemented from September 22, are streamlining tax structures and driving transparency. These reforms are reducing compliance burdens, enhancing financial predictability, and boosting investor confidence in institutional-grade retail spaces.
“GST reforms are also positively impacting consumers,” Kejriwal noted. “They simplify pricing, reduce tax cascading, and improve purchasing power. Uniform taxation across states ensures more consistent pricing, ultimately driving demand for premium retail experiences.”
Key Trends:
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From 2005–2015, over 250 malls were built during the organized retail boom
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Between 2015–2020, many were shut down, repositioned, or converted, particularly those lacking quality
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Underperforming malls with high vacancy rates (some exceeding 30%) faced financial stress
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Grade A malls saw positive rental growth, while others remained stagnant or declined
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New mall launches will average 1–1.2 million sq. ft.
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A significant share of smaller malls may be repurposed into mixed-use projects
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2–3 new retail-focused REITs are expected to launch soon
With rising institutional interest, growing consumer sophistication, and supportive policy reforms, India’s retail real estate market is clearly moving toward a world-class, experience-driven future.
