The retail sector in India witnessed a significant milestone in 2023 as it recorded an unprecedented leasing of 7.1 million square feet across the top eight cities in the country. This leasing figure marked a remarkable 47 percent increase compared to the previous year, according to a report released on Wednesday.
Primary leasing activity was driven by the completion of new malls, contributing to retail spaces in malls accounting for a substantial 30 percent share of total absorption. The surge in leasing occurred in the latter half of the year following substantial investments made by foreign entities into major Indian companies. Notable among these were Qatar Investment Authority’s staggering $1 billion investment, Abu Dhabi Investment Authority’s $598 million investment into Reliance Retail, and an undisclosed group’s $420 million investment into Pharmeasy.
The fashion and apparel sector dominated the retail leasing market with a record-breaking 32 percent share, driven primarily by mid-range fashion value and athleisure brands. Furthermore, luxury brands witnessed rapid expansion, contributing to 9 percent of all retail leasing. Recognizing the potential growth, international luxury brands are anticipated to continue expanding their presence across a diverse range of retail formats including malls, high streets, and standalone developments.
Looking ahead to 2024, a report by CBRE predicts that consumer spending and retail sales are expected to decline compared to the exceptional figures achieved in 2023. In light of a cautious economic environment and heightened inflation, retailers across categories are urged to be realistic in their growth expectations. Additionally, retailers are urged to prioritise innovation in-store experiences to enhance consumer engagement during these challenging times.
