India’s retail sector has reached a new milestone, recording the highest leasing activity in five years during the first half of 2024.
As reported by the Economic Times, a total of 3.1 million square feet of retail space was leased across eight cities, marking a significant uptick in the market.
The influx of international luxury brands has been a key driver behind this surge. Notable entries in the Indian market include:
- Maison Margiela and Time Vallée have entered India, capitalizing on the growing demand for luxury products.
- Breitling, the Swiss luxury watch brand, and Michael Kors, the American fashion house, have expanded to Chennai and Pune, respectively.
- Daiso Japan and ILEM Japan have opened new stores in Chennai, catering to the rising interest in international homeware and cosmetics.
- Charles Tyrwhitt and Franck Provost have inaugurated their first stores in Mumbai and Bengaluru, respectively, marking their debut in India.
Several factors contribute to the remarkable growth in retail leasing:
- Changing Lifestyles: As Indian consumers’ lifestyles evolve, there is a growing appetite for luxury and premium retail experiences.
- Infrastructure Development: The introduction of new malls and transit systems has facilitated easier access to high-quality retail spaces.
- Increased Global Aspirations: There is a heightened desire among Indian consumers to engage with global brands, driving the demand for premium retail locations.
Fashion and apparel continue to lead the retail market, representing approximately 39% of the market share in the first half of 2024. This segment includes mid-range, value fashion, and athleisure brands, reflecting a shift towards casual and versatile clothing.
Entertainment sector holds around 13% of the market share, this sector is driven by the popularity of cinema and recreational venues. With approximately 11% of the market share, homeware and department stores highlights the strong consumer interest in home-related products.
Tier-II cities such as Chandigarh, Jaipur, Lucknow, Indore, and Kochi have demonstrated substantial leasing activity, with a combined absorption of 0.4 million square feet in the first half of 2024. Indore and Kochi led with a joint share of 56%, while Lucknow and Chandigarh each held a 17% share.
Future Outlook
The second half of 2024 is anticipated to see an increase in retail space supply, with several investment-grade malls set to open in Bengaluru, Hyderabad, Mumbai, and other key cities. These developments are expected to add between 3 to 4 million square feet of new retail space.
The leasing trend is projected to continue, driven by:
- Demand for High-Quality Malls: There is ongoing demand for well-located, high-quality retail spaces.
- Growth of Direct-to-Consumer (D2C) Brands: An increasing number of D2C brands are recognizing the value of physical retail presence, creating new leasing opportunities.
India’s retail sector is poised for continued growth, driven by an influx of international brands, evolving consumer preferences, and ongoing infrastructure development. The first half of 2024 has set a high benchmark for retail leasing, with promising prospects for the remainder of the year.