A recent report by Knight Frank India has shed light on a burgeoning trend in the country’s retail sector: the proliferation of ghost shopping malls. These deserted complexes, characterized by a vacancy rate exceeding 40%, are increasingly becoming a common sight, with Delhi NCR leading the list, closely followed by Mumbai and Bengaluru.
The Ghostly Phenomenon
Knight Frank’s latest report, ‘Think India Think Retail 2024’, unveils a concerning reality: the steady rise of ghost shopping malls across eight major cities. From 57 such malls in 2022, the number surged to 64 in 2023, totaling approximately 13.3 million square feet of gross leasable area. This surge underscores the shifting consumer behaviors and preferences, with online shopping and larger shopping centers gaining traction.
Financial Implications
The financial repercussions of this trend are significant, with Knight Frank estimating a staggering impact of around Rs 6,700 crore or USD 798 million in 2023. Landlords and developers are grappling with the challenge of managing underperforming properties, necessitating strategic interventions to salvage or divest such assets.
Grades of Performance
While Grade A malls continue to thrive with robust occupancy rates and foot traffic, Grade C assets and ghost shopping centers are grappling with dwindling patronage. This dichotomy underscores the urgency for landlords to devise revitalization strategies or consider alternate avenues for these struggling properties.
Evolution of the Landscape
Interestingly, despite the addition of eight new retail centers, the total number of shopping centers in Tier I cities witnessed a decline to 263 in 2023, with 16 centers shuttered. Factors contributing to the closure of underperforming centers range from demolition to make way for alternative developments to permanent shutdowns due to operational challenges.
Navigating the Future
Knight Frank’s report serves as a clarion call for stakeholders in the retail sector to adapt to evolving consumer preferences and market dynamics. Flexibility, innovation, and a deep understanding of consumer behavior will be pivotal in ensuring the sustainability and relevance of retail spaces in the ever-changing landscape of Indian commerce.
As the retail sector continues to undergo transformation, stakeholders must embrace change and proactively chart a course towards a resilient and vibrant retail ecosystem that meets the evolving needs of Indian consumers.
