India is expected to witness a 30-35 million square feet (msf) expansion in mall space over the next 3–4 years, constituting a third of the existing stock, as per Crisil Ratings.

This growth is fuelled by a robust rebound in retail sales during the last fiscal. The anticipation is that the ongoing retail recovery will persist, supported by widespread consumption across regions and sectors, strengthening demand resilience, says the report.

Mall owners are projected to achieve revenue of about 125 per cent of the pre-pandemic level in the current fiscal.

“Malls are expected to attract investments of more than ₹20,000 crore over the next 3–4 years,” says Anand Kulkarni, Director, Crisil Ratings.

The resumption of work on new supply, which was stalled during the pandemic, and robust retail sales at malls are the reasons for the sizeable supply addition, says Kulkarni.

The upcoming substantial supply possesses two key features. Initially, it exhibits geographical diversity, with tier-2 cities accounting for 25 per cent of the forthcoming mall space. This highlights a growing trend of consumption beyond traditional metros and tier-1 cities, contributing positively to the risk profiles of mall owners.

Secondly, robust investor interest is expected to support the expansion, with Crisil Ratings projecting that 15-20 per cent of investments in new supply will come from entities like private equity, global pension funds, and sovereign wealth funds.

Nevertheless, it’s essential to monitor the potential effects of rising interest rates and inflationary pressures on discretionary spending, as these factors could influence the performance of malls in the future, according to the report.

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