Ghost Malls in India: Delhi-NCR Leads as Retail Real Estate Faces Structural Shift

Team L&M

India’s retail real estate sector is undergoing a major transformation, with a growing number of ghost malls in India highlighting structural challenges in the market. According to a recent report by Knight Frank India, Delhi-NCR has the highest number of ghost malls, with as many as 23 underperforming shopping centres—the highest among all Indian cities.

Interestingly, only one mall in Greater Noida shows signs of revival. In contrast, Tier 2 cities such as Bhubaneswar, Nagpur, Bhopal, Jaipur, and Kochi report minimal ghost mall inventory, indicating a more balanced retail ecosystem.

Knight Frank Report Highlights India’s Ghost Mall Crisis

The report, Think India, Think Retail 2025 – Value Capture: Unlocking Potential, offers one of the most comprehensive analyses of retail real estate in India, covering 32 cities and 365 shopping centres.

Key findings include:

• Nearly 20% of India’s operational malls are classified as ghost malls
• 74 malls fall under this category, representing 15.5 million sq ft of dormant retail space
• 15 high-potential malls (4.8 million sq ft) could generate up to ₹357 crore in annual rental income if revitalised

According to Ankita Sood, these underutilised assets present a significant opportunity for developers and investors through redevelopment and repositioning strategies.

Tier 1 Cities Face the Largest Retail Real Estate Challenges

Contrary to popular belief, the ghost mall phenomenon is not limited to smaller cities. Tier 1 cities account for 11.9 million sq ft of vacant mall space, indicating that even established retail hubs are struggling.

Key reasons include:

• Changing consumer preferences
• Shift toward experience-driven retail formats
• Weak tenant mix and outdated mall designs
• Exit of anchor tenants

However, with redevelopment, improved leasing strategies, and design upgrades, these ageing assets can be transformed into future-ready retail destinations.

Tier 2 Cities Show Strong Retail Potential

Tier 2 cities contribute 3.6 million sq ft to India’s ghost mall inventory. The challenges here are different and include:

• Operational inefficiencies
• Limited anchor tenants
• Inconsistent mall management

Despite this, many Tier 2 cities are witnessing strong demand for organised retail, making them attractive for future expansion.

As noted by Shishir Baijal, revitalising dormant retail space could unlock ₹357 crore in annual rental income, presenting a massive opportunity for investors and developers.

Retail Real Estate in India Becomes Increasingly Polarised

India’s retail market is becoming sharply divided between high-performing Grade A malls and struggling lower-grade assets.

• Grade A malls: High occupancy, strong footfall, premium brand presence
• Grade C malls: Vacancy levels as high as 36%, poor design, weak demand

Overall vacancy across 32 cities stands at 15.4%, but this masks a deeper issue—shortage of quality retail space, especially in Tier 2 cities.

Meanwhile:

• High streets continue to thrive, driven by domestic brands
• Airport retail spaces maintain strong premium brand mixes

Top Performing Retail Markets in India (Low Vacancy Cities)

Several Tier 2 cities are emerging as high-performing retail destinations:

• Mysuru (~2% vacancy): Limited supply, strong demand
• Vijayawada (~4%) & Vadodara (~5%): Balanced growth and controlled supply
• Thiruvananthapuram (~6%) & Visakhapatnam (~6%): Strong consumer demand with well-managed malls

These cities demonstrate the growing importance of non-metro retail markets in India.

Underperforming Retail Markets (High Vacancy Cities)

Some cities are struggling with oversupply and weak demand:

• Nagpur (~49% vacancy): Excess development and low absorption
• Amritsar (~41%) & Jalandhar (~34%): High competition among multiple malls

In these markets, overbuilding and poor planning have led to chronically high vacancies and underutilised assets.

Conclusion: Reviving Ghost Malls is Key to India’s Retail Growth

India’s retail real estate sector is at a critical inflection point. While demand remains strong and consumer aspirations are rising, the future of the sector depends on upgrading and revitalising existing infrastructure.

Transforming ghost malls through:

• Redevelopment and adaptive reuse
• Better tenant curation
• Experience-driven retail formats

…will be essential to unlocking their full potential.

As the retail landscape evolves, the focus must shift toward quality, sustainability, and strategic planning to ensure long-term growth in India’s dynamic retail market.