Real Estate: India's Retail Boom To Attract $3.5 Billion In Next 3 Years, Says Report

As shopping malls across Western economies grapple with rising vacancies and store closures, global capital is increasingly turning to India, a market that continues to defy global retail slowdown trends.

In the US alone, nearly 1,200 mall stores have shut since 2020, forcing close to 40 per cent of vacant malls to be rezoned or repurposed. In sharp contrast, India is witnessing a retail resurgence, driven by strong consumer demand, limited supply of quality assets and rising confidence among institutional investors.

According to ANAROCK Group, Indian malls are set to attract over $3.5 billion in capital inflows over the next three years, even as foreign brands expand their presence aggressively in the country.

Anuj Kejriwal, CEO (retail leasing

and industrial & logistics) of ANAROCK Group, said, “In the next 3 years, Indian malls are set to see over $3.5 billion of capital inflows. Meanwhile, over 88 foreign brands have entered the Indian retail market and are seeking to expand aggressively. Several more global brands are in the pipeline, seeking space in the severely restricted Grade-A assets currently available.”

Severe supply crunch fuels investor interest

A key driver of this optimism is the acute undersupply of organised retail space in India. The country’s per capita retail stock remains among the lowest globally. Tier-1 cities offer just 4-6 sqft per person, Tier-2 and Tier-3 cities 2–3 sqft, while Grade-A mall space stands at barely 0.6 sqft per capita. This compares with nearly 23 sqft in the US and over 6 sqft in China.

“This gap, combined with India’s per-capita income nearly doubling in the last decade, has created a demand-supply mismatch virtually unheard of in global retail,” Kejriwal said. “Grade-A malls are running near-full occupancy, reporting 95-100% occupancy with long waitlists for key zones. Rental growth has consistently surpassed pre-pandemic levels, and developers now find leasing cycles outpacing construction cycles – a rarity anywhere in the world.”

For long-term investors, this imbalance is translating into predictable, inflation-hedged cash flows, positioning Indian retail real estate as a compelling alternative to struggling Western markets.

Malls thrive as lifestyle destinations

India’s consumption story further strengthens the case. The country is expected to become a $6-trillion consumption economy by 2030, with malls evolving into lifestyle and social hubs rather than mere shopping centres.

Unlike in the West, Indian malls are anchored by entertainment, dining and experiential retail. Weekday footfalls in major malls routinely cross 20,000, while weekend numbers surge beyond 40,000. Food & beverage and entertainment together account for 30-35 per cent of total footfalls, creating a retail mix that has remained resilient even as e-commerce disrupts global markets.

Institutional capital sharpens focus

While India has over 600 operational malls, fewer than 100 meet institutional investment benchmarks, intensifying competition for high-quality assets.

“With its 19 malls’ portfolio housing 1,000+ brands and generating Rs 1,600 crore in annual NOI, Blackstone’s Nexus Select Trust REIT listing in 2023 kick-started retail-led REITs in India,” Kejriwal added. “It established the sector’s credentials as a transparent, scalable, and professionally managed asset class. By 2030, at least two more retail REITs are expected to enter the Indian market.”

E-commerce complements, not competes

Contrary to global trends, e-commerce has not eroded the relevance of Indian malls. Online retail penetration in India remains around 8 per cent, far below the 20-plus per cent levels seen in the US and China.

Brands are increasingly adopting a ‘phygital’ strategy, using physical stores as experience and trust-building hubs while leveraging online platforms for scale. Many direct-to-consumer brands report offline conversion rates two to three times higher than online, reinforcing the durability of brick-and-mortar retail in India.

Higher returns draw global investors

Indian Grade-A malls typically deliver internal rates of return of 14-18 per cent, nearly double the yields in many Western markets. Structured rental escalations, revenue-sharing models and consistently low vacancy levels continue to attract global capital seeking both yield and long-term growth.

“This renders India unique among the world’s leading retail markets,” Kejriwal said. “In the US and Europe, malls are contending with oversupply, declining footfalls, online cannibalisation – and the looming spectre of repurposing into other formats. In contrast, the Indian retail market has limited quality supply, rising incomes, heavy footfalls, and rapid brand expansion. In the first half of 2025, retail leasing in India rose almost 70% Y-o-Y, and new mall supply grew by over 160%.”