16 new shopping malls start operations in eight metros since 2020, says report

At the end of the first six months of 2022 calendar year, Knight Frank said: "India has a total mall stock of 8.6 million sq meter (92.9 million square feet) spread across 271 operational malls in the top eight markets." An incremental supply of 15.5 million square feet was added in the 30 months, despite the disruption of the pandemic, the consultant said.

At present, NCR contributes 34 percent of total mall stock, while Mumbai 18 percent and Bengaluru contributes 17 per cent. Shishir Baijal, Chairman & Managing Director at Knight Frank India said, "The retail real estate sector has reached a new level of maturity where smaller-sized and lower-grade developments are giving way to Grade A malls."

He highlighted that the existing Grade A malls have over 95 percent occupancy which is indicative of the demand for quality real estate in this segment.

"Given that retail malls are experiential, more of the future developments will want to create destinations. Therefore, scale and quality of development would require developers to specialise in shopping centre development and operations," Baijal said.

He expected retail real estate to offer great opportunities for investments including REITs (Real Estate Investment Trust) in the future.

As per the report, only 39 percent of all mall spaces in India is classified as Grade A malls with a total gross leasing area of 36 million square feet. The total number of malls classified as Grade A is 52 in these top eight cities. These malls have high occupancy, strong tenant mix, good positioning and active mall management.

Knight Frank report suggested that there are estimated 94 malls in the Grade B category with a gross leasing area of 29.1 million sq ft. Grade C malls offer a total leasing area of 27.8 million sq ft contributing 30 percent to total mall stock in India represented by 125 malls.

The consultant also pointed out that the size of the mall developer community has shrinked to 33 players now who have the execution capacity, credibility and a good track record of mall management. Before 2010, it said more than 120 players were operating in the retail real estate space.