'Ghost malls' in top 8 cities rise 59%

There has been a big rise in shopping malls lying vacant across India. According to a Knight Frank  report, ‘Think India Think Retail 2024 – Shopping Centre and High Street Dynamics Across 29 Cities’, there has been a sharp rise in low performing retail assets with approximately 13.3 million square feet (mn sq ft) of retail shopping centre space categorised as ‘Ghost Shopping Centre’.

There has been an increase of 59% year-on-year (YoY) in Ghost Shopping Centre by Gross Leasable Area (GLA) since 2022 in the prime markets while the number of shopping centres that moved to 64 shopping centres by the end of 2023 over 57 in 2022. As a result of the rise in Ghost Shopping Centres, Knight Frank India estimates that loss of value to be at Rs 6,700 cr or USD 798 million in 2023.

National Capital Region (NCR) accounted for the highest Ghost Shopping Centre stock measuring at 5.3 mn sq ft (rise of 58% YoY), followed by Mumbai with 2.1 mn sq ft (rise of 86% YoY) and Bengaluru with 2.0 mn sq ft (rise of 46% YoY). Hyderabad is the only city to record a decline in the Ghost Shopping Centre stock by 19% YoY to 0.9 mn sq ft in 2023. The sharpest rise in Ghost Shopping Centres was recorded in Kolkata (23=7% YoY), albeit at a lower base.

In tier 1 cities the total number of shopping centres have reduced in a period of one year. Despite new addition of 8 new retail centres, total number of shopping centres reduced to 263 in 2023 as 16 shopping centres were shut down over the last year. Underperforming shopping centres were either demolished due to reasons such as developers undertaking residential or commercial developments or were permanently closed or auctioned.

The report delves into the retail real estate markets beyond the top-tier markets. This comprehensive study covers 340 shopping centres and 58 high streets across 29 Indian cities, conducted through primary surveys. This unique survey meticulously examines retail locations in the selected markets to compile a comprehensive compendium of store-level information.

Shopping centres in distress grapple with ongoing hurdles, compounded by fresh additions worsening their already elevated vacancy rates. This surge has led to a rise in the count of shopping centres labelled as Ghost Shopping Centre stock. Such a scenario offers institutional investors the chance to explore avenues for repurposing or revitalizing their retail portfolios, while developers can seize opportunities to monetize these assets through repurposing or redevelopment efforts.