India’s retail real estate set for a major transformation

Team L&M

India’s retail real estate sector is on the brink of a major transformation.The country’s Real Estate Investment Trust (REIT) ecosystem is still dominated by commercial office assets. But, the next wave of growth can come from retail malls, shopping centres, and mixed-use developments. Consolidation of quality retail assets, steady consumer spending, and rising urban incomes are driving this shift.

Data from ANAROCK Research estimates that the Indian retail REIT market can become a between INR 60,000 – INR 80,000 Crore market by 2030. This is roughly 30-40% of India’s overall REIT market, which is projected to touch USD 25 billion (INR 2 lakh crore) by 2030.

Anuj Kejriwal, CEO & MD – ANAROCK Retail, says, “Currently, out of the five listed REITs in India, four are office-focused. Only one – Nexus Select Trust – is retail-centric. However, with Grade A malls now maturing into stable, income-generating assets. Further, 2-3 retail REITs are expected to launch over the next 3-5 years. Our estimate of the Indian retail REITs’ potential to become a INR 60,000 – INR 80,000 crore market in the next five years assumes only partial listings of various institutional portfolios.”

This vital new entry into India’s REIT universe will mirror the path of mature economies. In mature economies, retail REITs form 15% to 25% of total REIT market capitalisation.

Hotspots Emerging Beyond the Metros

Tier-II cities such as Indore, Coimbatore, Surat, Bhubaneswar, and Chandigarh are witnessing the entry of institutional players for the first time. The mall developers like Phoenix Mills, Prestige Estates, and Nexus Malls are expanding aggressively in these clusters.

New projects averaging 1-1.2 million sq. ft. are being planned. And, entertainment, F&B, and lifestyle retail accounts for nearly half of new mall space.

Market Demand-Supply Dynamics

According to ANAROCK Retail’s RELEAP H1 2025 report, the first half of the current year saw 2.8 million sq. ft. of mall space deployed across the top seven cities. This is 155% more than in 2024, when 1.1 million sq. ft. of supply was recorded. Net absorption in malls was approx. 2.0 Mn sq. ft. This is almost 31% more than that in the previous year. The absorption was predominantly driven by the Apparel and F&B segments, which account for 55% share of the total.

These absorption trends in institutional assets reflect an evolution in Indian consumer preferences,” says Anuj Kejriwal. “High-value consumption categories are being seen as gaining increasing traction. This is an important signal to mall developers and their tenant mix strategy going forward.”

High Streets Vs. Malls – A Changing Rental Landscape

“Across major cities, high streets are showing consistent rental appreciation, reflecting sustained demand for prime retail locations with high footfall and visibility characteristics,” says Kejriwal. “In contrast, mall rentals have largely remained stagnant in most cities, indicating a more cautious approach from retailers towards enclosed retail formats amid evolving market dynamics.”

Outlook

The Indian organised mall sector is no longer chasing square footage and focusing on creating vibrant urban destinations instead.

Predictions for the Next 5 Years:

• Top 5 mall owners will control 60% of the overall organized stock
• New retail REITs will institutionalize the market further
• We will see wave of mixed-use redevelopment, with older malls repurposed into integrated lifestyle districts

“Retail is no longer just an afterthought in Indian real estate portfolios,” summarises Kejriwal. “It is now edging closer to centre-stage, under the spotlight as a resilient, high-yield asset class which is finally ready for institutional scale and public markets.”