India’s retail sector is heading towards a revolution with close to 34 new malls coming up in top eight cities by 2020. A whopping supply of 13.6 million sq. ft. is expected to come up in the next three years across the country. Experts are pegging the size of retail sector at Rs. 1 trillion by 2020 with an expected CAGR of 15 percent during 2016 – 2020.

Retail boom on the horizon

Retail leasing has been steadily rising and stood at 2.3 million sq. ft. between January and September 2017. This growth of almost 55 percent can be attributed to the influx of foreign retailers looking at expanding aggressively across major retail centers. International brands are favoring urban malls with higher occupancy levels to reach out to an upmarket audience.

Investments backing growth

Private equity firms are keenly eyeing the development of retail scenario and have invested over $ 724 million in the first nine months of 2017. Aiming to diversify their investment portfolio, leading global private funds such as Blackstone Group, Canada Pension Plan Investment Board (CPPIB), GIC, Xander Group and APG Asset Management are investing in Indian retail realty.

Emerging Retail Centers

 
Hyderabad is expected to witness the sharpest retail growth with 11 new malls coming up in the city. These new retail centers will more than double the city’s current mall inventory from under 3 million sq. ft. to over 6 million sq. ft. by 2020. IT and residential hubs such as Madhapur, Gachibowli, and Begumpet are likely to see the most heightened retail activity. Among other cities, Delhi NCR and Bengaluru are expected to add 8 and 6 new malls respectively by 2020.

After a prolonged lull, the traditional brick and mortar retail space are taking center stage and set the tone for the retail sector’s revival. Even as e-commerce companies are keen on establishing their physical presence through ‘experience’ stores in many malls. Going forward, shopping malls will be promoted as a ‘destination’ for the recreation of the entire family beyond just stores and selling.