Superior-grade malls to lead 70% of new supply in 2025-26

Of the 12.3 million sq. ft of new Grade A mall supply projected for 2025 and 2026, a substantial 8.6 million sq. ft will be classified as superior grade, per the report titled “Premiumisation of India’s Retail Sector—Upscaling, Upgrading and Evolving," unveiled at the MAPIC India Shopping Centre event Tuesday. 

Consumer aspirations, increased discretionary spending, and a significant shift in brand and developer strategies are driving the emergence of a more sophisticated, experience-driven retail ecosystem in India.

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Superior-grade malls, typically developed and managed by well-established developers or institutional investors, are characterized by high occupancy rates, exceeding 85%, and more upmarket tenants focusing more on discretionary categories such as casual dining restaurants, beauty and shopping.

Developers pointed to a significant undersupply of Grade A malls nationwide. Strong occupancy rates and continued tenant interest from international and domestic brands are driving developer focus towards premium retail spaces.

“There is a very, very clear gap in the market. There's a very clear line that has been drawn not only from the tenant's perspective but also from the consumer's perspective about their expectation of a top-tier mall. Today, consumers also know what a Grade A mall is," said Abhishek Bansal, the executive director of Pacific India, which operates malls in Delhi-NCR, Dehradun and an upcoming property in Jaipur. 

Change in tenant mix

“If you look at the Jaipur market, there is no Grade A organized retail environment. We are bringing 1.8 million square feet of retail space into that market. There will be premium large entertainment centres, cinema, food and beverage offerings," he said.

This trend of premiumisation is also bringing about a shift in tenant mix and category distribution within shopping malls. 

Traditional anchor tenants like hypermarkets and cinemas are becoming less dominant, making way for fashion, beauty, wellness, and experiential dining, which are now key drivers of shopper traffic and spending, per the report.

Saurabh Shatdal, managing director, capital markets and head of retail, India at Cushman & Wakefield, stated that aspirational categories like food and beverage, jewellery, athleisure, spas, and beauty are set to expand their presence in malls, potentially increasing their share of occupancy to 40% over the next few years, from the current sub-10%.

"We are still scratching the surface when it comes to premium consumption.  Demand for such centres will be driven by younger shoppers, and developers have to keep in mind changing consumption trends," he said in an interview Tuesday.

Unlike Western countries, where shopping is more centralised in malls and designated shopping streets, India's retail landscape has historically been dominated by high-street and local neighbourhood markets. However, the last decade has witnessed the entry of major foreign retailers, alongside expansions by homegrown giants like Tata Group, Reliance Retail, and Aditya Birla Group. 

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Consequently, demand for mall space exceeded supply for the third consecutive year in 2024, leading to lower vacancy rates and higher rentals.

On the other hand, new-age brands said smaller spaces in top-quality malls tend to perform well. 

“We continue to open in top-tier malls as and when we find the space. We do see top-tier malls doing well for us—even if it's a small-sized store," said Sidhant Keshwani, founder and CEO of women's ethnic wear brand Libas. 

The retailer that operates close to 30 stores is equally split between malls and high streets. 


Offline differentiation for malls

Other developers said that with more consumers buying goods online, malls need to differentiate themselves offline. Consequently, they are renovating existing properties and attracting more premium tenants.

“We are premiumizing some of our existing properties. In Noida's DLF Mall of India, for instance—we are moving to the next level of consumer evolution with more brands such as a new Polo Ralph Lauren store, Chanel beauty and Dior beauty," said  Pushpa Bector, senior executive director, head of luxury and shopping malls, DLF Retail. DLF operates two luxury properties and six premium properties across Delhi-NCR and Chandigarh. The developer is set to come up with a large mall in Gurugram with an investment of ₹2,600 crore.

She said consumers want to dress and eat well, explaining the need for the developer to shake up its tenant mix.

Bector said the developer will continue to keep brands across price points and ensure consumers can experience more upmarket brands.

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