In 2023, the retail sector recorded a historic peak in leasing, securing 7.1 million square feet across eight cities. This marked a notable 47% surge compared to the previous year, even as major retailers reduced their pace of store expansion.
According to CBRE, about two dozen international brands entered India, and the expansion efforts of existing global brands in the country have fueled the demand.
Retail leasing witnessed a significant uptick in 2023, with international brands contributing nearly 25%, a substantial jump from the 14% recorded in the previous year.
La Vie en Rose, the Canadian lingerie retailer, marked its entry into the Indian market through a partnership with Apparel Group India. The journey began with the launch of its first store in Delhi-NCR in July 2023, followed by expansions into Pune and Bangalore.
Similarly, Rimowa, the German luxury luggage brand, ventured into the Indian market through a partnership with Reliance Brands, debuting its first store in Mumbai.
Other notable expansions by international players include the establishment of stores by French fashion & apparel brand Bugatti Fashion and the American furniture brand West Elm in Pune. Furthermore, American lingerie brand Victoria’s Secret has expanded its retail presence by opening stores in Hyderabad and Pune.
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“The luxury sector, which saw a 162% increase in 2023, shows a promising trend with the entry and expansion of international brands. This positive momentum is expected to continue, aligning with our anticipation for a similar trend in the years ahead,” said Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE.
India has become one of the most enticing consumer markets, reflecting a growing interest among retailers in establishing new setups, expanding, and upgrading stores.
The demand for retail spaces in newly completed malls played a crucial role in influencing the overall occupancy of retail spaces during the year. Primary leasing in these malls accounted for nearly 30% of the total absorption.
“As retail leasing in major tier II cities of India (Chandigarh, Lucknow, Jaipur, Indore and Kochi) surges to 1.2 million sq. ft. in 2023, we witness a transformative shift led by sectors such as fashion & apparel, homeware, entertainment, and hypermarkets, commanding over 70% of leasing activity. The increased demand for organized retail spaces has attracted leading developers and institutional players to these markets, evolving retail formats from vanilla stores to shopping malls, department stores, hypermarkets, and dedicated entertainment zones,” said Ram Chandnani, Managing Director, Advisory & Transaction Services, CBRE India.
Additionally, the total retail supply reached a historic peak of 6 million square feet in 2023, marking a significant year-on-year increase of over 316%. This rise in supply can be attributed to the commencement of operations for 12 investment-grade malls located in Bangalore, Pune, Mumbai, Hyderabad, Ahmedabad, Delhi-NCR, and Chennai.
In 2023, the primary driver of retail leasing was the fashion and apparel sector, commanding a 32% share of the total leasing. This trend was largely shaped by the prevalence of mid-range fashion value and athleisure brands.
Homeware and department stores dominated the leasing scene in 2023, securing a formidable 17% share. Following closely were food & beverage at 12%, luxury at 9%, and consumer electronics at 6%, shaping the overall distribution in the leasing market.
The expectation of a growing mall supply and positive consumer spending trends is anticipated to stimulate future expansion for both international and domestic retailers.