Retail leasing up 24% Y-o-Y in Jan-Jun’23 to 2.87 mn sq ft, supply increases 148%

July 25, 2023 – CBRE South Asia Pvt. Ltd., on Tuesday announced the findings of its report, ‘India Market Monitor Q2 2023’. The report highlights real estate growth, trends, and dynamics across the retail sector in India.

According to the report, retail leasing witnessed a 24% Y-o-Y growth in Jan-June’23 period and a 15% increase compared to Jul-Dec’22 period. Total leasing during Jan-Jun’23 stood at 2.87 mn. sq. ft. compared to 2.31 mn. sq. ft. (Y-o-Y). Bangalore, Delhi-NCR, and Ahmedabad collectively accounted for a cumulative share of 65% in leasing activity during the first six months this year. The Jan-Jun’23 period also recorded a 148% Y-o-Y increase in supply. Total supply in Jan-June’23 stood at 1.09 mn. sq. ft. compared to 0.44 mn. sq. ft.(Y-o-Y). Further, boosted by the increased appetite of shoppers, the top eight cities saw an 8% growth in mall completions on a half-yearly basis. Ahmedabad led the growth in supply addition with a 73% share, followed by Delhi-NCR at 20%.

During the Apr-June’23 quarter, total leasing stood at 1.3 mn. sq. ft. The combined share of Bangalore and Delhi-NCR in retail space leasing stood at 59%. During this period, Bangalore emerged as the frontrunner in leasing, capturing a significant 35% share in overall leasing, followed by Delhi NCR with a 24% share, while Chennai secured a 14% share. Hyderabad also displayed strong performance, claiming an 11% share in total leasing during this period. The leasing activity during the quarter was primarily driven by fashion & apparel with a 38% share; food & beverage sector accounted for an 18% share, both luxury and home & department store sectors held an 11% share, while consumer electronics sector accounted for 7% of the leasing activity during this period.

During the Apr-June’23 period, the share of leasing activity was led by domestic firms (75%), followed by retailers from APAC (12%), EMEA (10%) and America (3%).

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “Retail leasing in the first half of the year showcases a promising outlook for the coming quarters. We anticipate that secondary leasing will continue to thrive while primary leasing is set to gain momentum, driven by a robust supply pipeline and the approaching festive season. With the likelihood of more international brands entering the market across various categories, we are witnessing growing traction in the luxury segment.”

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “The retail leasing market presented notable trends and opportunities in the Apr-Jun quarter. With construction costs staying elevated, developers and investors are likely to explore redevelopment and redesign of existing spaces, particularly in prime locations with high occupancies and rents. This approach enables them to maximize the potential of these areas while managing costs effectively. Additionally, tier-II cities are expected to gain greater traction as retailers recognize the potential of these markets.”

The report also highlighted quarterly rental growth in malls in select pockets of Kolkata (South Kolkata 13-18%, East Kolkata 8-12% and Bangalore (East Bangalore 0-2%). High street stores in West and East Kolkata witnessed a rental increase between 10% and 15%. In Bopal, Ahmedabad, rental growth of 9-13% was observed. Golf Course Road in Gurgaon also witnessed rental growth of 4-8%. Lastly, 100 Feet Road, Indiranagar, in Bangalore, witnessed rental growth of 1-4%.