Despite apprehensions, e-commerce giants like Amazon and Flipkart may not have been able to wipe out organised brick-and-mortar retail after all. What seemed more like a pandemic trend when e-commerce took a lead over conventional store-shopping seems to have now ebbed. A report by real estate consultancy firm Anarock shows a boom in expansion of malls across India. Mall space in India in 2022 is set to expand to 10 mn sq ft, almost double than that of 2021 when it expanded by 5.76 mn sq ft. The report also predicts a sizeable expansion of mall space in 2023.
As per the Anarock data, real-estate space supply in 2022 has almost doubled to 10 mn sq ft, as compared to around 5.76 mn sq ft in 2021. India is set to open 15 new malls across 12 cities this year. Of these, four malls are expected to come up in Chennai where the retail space could expand to over 2.55 mn sq ft.
However, the report explains that the “pandemic induced e-commerce boom” may not be wished away and will continue to co-exist with regular retail.
For this year, Tier-1 launches with new mall supply include cities like Ahmedabad, Chennai, Bengaluru, Hyderabad, Mumbai, Pune and Ghaziabad in NCR spanning 7.65 mn sq ft area; Tier-2 and 3 cities include Baroda, Budaun, Indore, Nagpur and Udaipur with remaining 2.50 mn sq ft area.
In 2021, India saw new mall supply of approximately 5.76 mn sq ft of which 70 per cent was in Tier-1 cities and 30 per cent in Tier-2 and 3 cities. The growth is likely to sustain in 2023.
Next year, approximately 7.25 mn sq ft of new mall space supply spanning 16 new malls will hit the market across the country: 67 per cent area in Tier-1 cities, 33 per cent in Tier-2 and 3 cities.
“In the course of two severe waves that saw massive restrictions forced on malls, operators had to rethink their business plans and strategies," said Pankaj Renjhen, COO & Jt. MD, Anarock Retail.
"However, the massive nationwide vaccination drive resulted in a much milder third wave at the beginning of 2022 -- and the withdrawal of restrictions allowed economic activities to restart. This has fuelled new growth in the retail sector,” he added.
What fuelled new mall growth?
The new growth spurt in the retail spaces has been attributed to the present ‘return to normal’ phase, with people regaining normal shopping and socialising patterns as fears over Covid-19 ebb, all of which have combined to generate increased footfall. Mall developers, who had slowed down over the last two years, are now completing their work on war-footing. The Tier 2 cities, which are fuelling this rapid growth, have witnessed growth in disposable income, mobile internet penetration, and support infrastructure.
Consumers in Tier-2 and Tier-3 cities now show an apparent propensity for branded products, which sets the stage for accelerated growth of organised retail across the country.
"While 2020 was a washout year with new mall supply of just 2.1 million sq ft in Tier-1 cities, it nearly doubled to 4.01 million sq ft in 2021," Renjhen said. "The performance of most malls in key consumption centres has either surpassed pre-pandemic levels in February 2020 or inched closer to those thresholds,” he added.
Tier-2 and 3 cities are witnessing rapid mall penetration. The supply in these cities in the current year is close to 2.5 million sq ft, recording a yearly growth of 91 per cent, the report said.
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