Warning signs. More ghost malls in the making as consumers shun poorly managed shopping centres

The number of ghost shopping malls with vacancy of over 40 per cent rose to 64 in 2023 from 57 in 2022, while the number of malls in tier-1 cities shrank 3 per cent due to a few of them being demolished to make way for residences.

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In terms of area, malls with poor occupancy and footfall occupied 13.3 million square feet (msf) last year compared to 8.4 msf in 2022, translating into a sunk cost of $799 million, up from $524 million a year ago, according to Knight Frank India’s report on India’s retail landscape. ‘Think India Think Retail 2024.’

If the land costs are also included, this figure would rise to around $2.5 billion, said Vivek Rathi, National Director, Research. The Knight Frank report has estimated that 132 malls, categorised as Grade C, with a high vacancy of 36.2 per cent, run the risk of transforming into ghost malls in the near future.

Though malls outnumber high streets in terms of number and have doubled the number of stores, high-street revenues per square feet are 238 per cent higher at $370.

Knight Frank India’s report, which encompasses both shopping centres or malls and high streets, is based on a survey of 340 malls, 58 high streets across 29 cities.

Increase in ghost malls

Empty to sparsely occupied malls are common across the country, even in tier-1 cities such as Mumbai, Delhi and Bengaluru that have the most shopping centres.

The reasons for consumers shunning some malls are many, including poor design, bad mall management, unattractive frontage, competitive intensity, not enough retailers or poor mix of tenants and development of high-grade malls in the vicinity.

A major factor is also the size of the malls. Most of the malls that fall in this category are under 1 lakh square feet unable to offer consumers a complete shopping experience and with limited parking space. Being strata-owned, the upkeep of the premises is also left to individual shop or floor owners. Such malls also do not have an anchor tenant.

Despite growing consumerism and the mall culture spreading to tier-2 and 3 cities, the report pointed out that the disparity between well-performing malls and those with high vacancy comprising Grade C and ghost stock emerged even more starkly in 2023 compared to 2022.

A move is being made to repurpose the malls, either as co-working spaces, food plazas, or parks, or to demolish them outright to develop other buildings.

Top-grade malls, numbering 208, account for 78 per cent of the total occupying over 9 msf.

High streets versus malls

Though there are fewer high streets compared to malls in the top eight cities, around 30 per cent of all retail stores are on high streets. 

Apparel stores and food and beverage outlets dominate both formats equally, though high streets have more accessories shops and malls have more beauty shops.

Malls have a higher revenue potential at $14 billion in FY25, compared to $3 billion from high streets.

The National Capital Region has the highest concentration of high-street stores, with Khan Market in Delhi being the most expensive. Bengaluru and Hyderabad are second and third on the high street list.

Malls are heavily concentrated in the tier-1 cities, though other cities are also catching up. Lucknow has a share of over 18 per cent followed by Kochi, Jaipur, Indore, and Kozhikode.

Compared to malls, which international brands prefer, high streets are dominated by Indian brands in most categories except electronics and footwear.

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