South Indian Cities Ride High on New Mall Supply

Despite the decline in the economy, India is set to see a generous supply of new malls over the next three years. This is largely backed by the confidence of private equity investors who have shown increasing interest in the Indian retail market...

- Anuj Kejriwal, MD & CEO – ANAROCK Retail

In what is widely considered the annus horribilis (horrible year) for the Indian economy, various sectors were negatively impacted in 2019. While the Index of Industrial Production (IIP) or factory output contracted by 4.3 percent in September - the lowest in almost eight years - the consumption-driven retail sector also took a hit. As per ANAROCK data, retail leasing activity across top 7 cities dropped by 35 percent in 2019 as against the previous year – from 5.5 million sq. ft. in 2018 to 3.6 million sq. ft. in 2019.

However, despite this decline, India is set to see a generous supply of new malls over the next three years. This is largely backed by the confidence of private equity investors who have shown increasing interest in the Indian retail market. As is, the share of organised retail market is extremely low in India at around just 9 percent (compared to western world markets like US where the share is more than 85 percent) so there is ample scope for growth.

South Indian Cities Buck Mall Supply Trend

As per ANAROCK research:

As many as 98 new malls (sprawling over 48 million sq. ft. area) are to enter Indian cities and towns by 2022-end

Interestingly, out of this total supply, south Indian cities will host at least 34 new malls spread over more than 16 million sq. ft. area

South Indian cities’ new mall supply is close behind the supply in their western counterparts, where at least 37 new malls covering 17 million sq. ft. area are slated to come up during the same period

The southern region is far ahead of North India, where 21 new malls spread over approx. 11 million sq. ft. area is slated to come up by 2022-end.