Mumbai: India’s retail real estate sector is undergoing a remarkable transformation, shifting from a fragmented, volume-led growth model to one driven by quality and institutional consolidation—an evolution that has few global parallels. According to the latest ANAROCK research, nearly 30-35% of the country’s 650 operational malls are now at institutional-grade standards, reflecting the sector’s increasing maturity.
This momentum is led by top institutional players such as Nexus Malls (Blackstone), Phoenix Mills, DLF, Lakeshore, Raheja Group, and Pacific. Together, these giants currently operate 58 malls spread across 34 million sq. ft., while also planning 45+ new malls covering over 42.5 million sq. ft. of premium retail space over the next three to five years.
Anuj Kejriwal, CEO & MD, ANAROCK Retail, says, “It is notable how quickly institutional investment is spreading beyond the metros into Tier 2 hubs. Chandigarh, Indore, Surat, Bhubaneshwar, and Coimbatore, with highly aspirational populations and increasing purchase power, are the new growth centres for organized retail. The Indian retail industry is driven by changing consumer expectations, global brands’ preference for standardized, and experiential spaces. However, growth also hinges on institutional investments, which means that mall assets must also appeal to private equity and REIT investors.”
Grade A malls have risen from just 22% of the inventory in the top 7 cities in 2015 to a projected 60% by 2027. Meanwhile, vacancies have reduced from 19% to approx. 9% — a dramatic sign of improving quality and demand.
“The average annual rental growth in Grade A properties currently stands at 5-8% CAGR, far outpacing Grade B and C peers,” says Kejriwal. “Underperforming malls must either face closure, repositioning, or conversion to mixed-use developments.”
Despite its rapid transformation, India still trails behind developed economies with just 110 million sq. ft. of quality retail stock vis-a-vis 700+ million sq. ft. in the US and 400+ million sq. ft. in China, where mall assets are almost exclusively institutionally owned. However, India’s unrelenting urbanization and consistently odds-beating retail sales productivity – INR 1,200–1,600/sq. ft./month in Grade A malls – underscore the massive upside potential.
With new mall launches averaging over 1 million sq. ft., further REIT activity is in the cards – and with a strong move towards ‘bigger, better, branded’ malls, India’s retail real estate landscape is preparing for a world-class, experience-driven future.
GST Reforms
The changes in the GST regime, implemented since September 22, simplify the tax structure for real estate, amplifying the push towards higher transparency and efficiency. For institutional retail spaces, this results in reduced compliance costs and streamlined tax payments, boosting both cash flows and investor confidence. These tax revisions also impact under-construction commercial properties, where GST rates and input tax credits (ITC) are key factors.
While these GST reforms support consolidation and growth in institutional retail, improve financial predictability and attract more investment in quality developments, their impact on shoppers also needs to be highlighted.
“The GST reforms, with their streamlining effect on taxation, make pricing of retail goods more transparent, and reduce tax cascading,” highlights Anuj Kejriwal. “The result – significantly improved shopper confidence and purchasing power – will boost spending on premium and branded products. With uniform taxes across states, shoppers will benefit from more consistent pricing. With this rejuvenating effect, the new GST regime will also drive demand for experience-driven retail formats and thereby further accelerate the growth of institutional malls in India.”
