A startling trend has emerged in India's retail landscape as ghost shopping centres, characterised by soaring vacancy rates, have witnessed a staggering 230 per cent surge, reaching 13.3 million square feet in 2023, according to a recent report by real estate consulting firm Knight Frank.
The report, titled 'Think India Think Retail 2024', reveals that the number of these underperforming centres, defined by vacancy rates exceeding 40 per cent, escalated from 57 in 2022 to 64 by the end of 2023. This surge translates to a substantial Rs 6,700 crore loss in potential sales for the year.
The rise of ghost malls, calculated based on gross leasable area (GLA), underscores the challenges faced by shopping centres grappling with shifting consumer preferences towards online shopping and larger retail spaces offering enhanced experiences.
Knight Frank's study encompassed 340 shopping centres and 58 high streets across 29 Indian cities, indicating a total shopping centre stock of 125.1 million square feet in 2023.
The National Capital Region emerged as the epicentre of this phenomenon, recording 5.3 million square feet of underperforming space, marking a 58 per cent year-on-year surge. Mumbai followed with 2.1 million square feet (an 86 per cent increase), trailed closely by Bengaluru with 2 million square feet. Hyderabad was the only city to report a decrease.
The report highlights that underperforming centres were either demolished for redevelopment, permanently closed, or auctioned, reflecting the evolving dynamics of the retail sector.
Shishir Baijal, Chairman & Managing Director of Knight Frank India, emphasised the need for strategic interventions to revitalise the retail sector. He noted the exemplary performance of Grade A malls, which maintained robust occupancy, foot traffic, and conversion rates. In contrast, Grade C assets and ghost shopping centres lagged behind, prompting landlords to explore options for rejuvenation or divestment.
Despite the surge in ghost malls, there was a slight improvement in overall shopping centre vacancies across eight major Indian cities, declining from 16.6 per cent in 2022 to 15.7 per cent in 2023. Grade A malls witnessed heightened demand from retailers, leading to high double-digit vacancies in Grade C structures.
The report underscores the urgent need for adaptive strategies by stakeholders to navigate the changing retail landscape, with opportunities for repurposing or revitalising assets and a growing preference for Grade A assets driving the market dynamics.
