India's mall boom set to draw $3.5 billion as Western retail struggles

As malls in Western countries brace for an existential crisis, Indian malls are expected to receive over $3.5 billion in capital inflows over the next three years as global capital pivots toward a market that defies the global retail trend, according to a report by ANAROCK. 

While the U.S. has seen a net closure of nearly 1,200 mall stores since 2020, with rising vacancies forcing almost 40% of empty malls to undergo rezoning or repurposing, India is experiencing a retail resurgence, says the report, attributing growth to strong consumer demand and growing institutional investor confidence.

“Over 88+ foreign brands have entered the Indian retail market and are seeking to expand aggressively. Several more global brands are in the pipeline, seeking space in the severely restricted Grade-A assets currently available,” says Anuj Kejriwal, CEO - retail leasing and industrial & logistics, ANAROCK Group.

Explaining the rationale behind India’s retail market growth, the report says that India’s massive unmet demand from a young consumer base and limited organised retail competition, backed by supportive FDI policies, are exactly what foreign brands and investors now seek. “A major confidence driver is the extreme undersupply of quality retail space in the country.” 

Notably, India’s per capita retail stock remains one of the lowest in the world - Tier 1 cities operate with just 4 to 6 sq. ft. per person, Tier 2 and 3 cities with 2 to 3 sq. ft., and Grade A mall space alone sits at barely 0.6 sq. ft. per capita. In contrast, the US averages close to 23 sq. ft. while China exceeds 6 sq. ft. 

“This gap, combined with India’s per-capita income nearly doubling in the last decade, has created a demand–supply mismatch virtually unheard of in global retail,” says Kejriwal. “Grade-A malls are running near-full occupancy, reporting 95-100% occupancy with long waitlists for key zones. Rental growth has consistently surpassed prepandemic levels, and developers now find leasing cycles outpacing construction cycles - a rarity anywhere in the world.” 

For investors seeking predictable, inflation-hedged cash flows, this imbalance is a compelling long-term opportunity. 

This becomes even more significant as the country aims to become a $6 trillion consumption economy by 2030. Unlike their Western counterparts, Indian malls are lifestyle destinations anchored in entertainment, dining, and social experiences. Daily footfalls in major malls routinely exceed 20,000 on weekdays and surge beyond 40,000 on weekends. F&B and entertainment now account for 30-35% of footfalls.

Sharpened investor appetite 

India has over 600 operational malls, but less than 100 meet the institutional benchmarks that attract global funds, triggering aggressive competition for top-tier assets. “With its 19 malls’ portfolio housing 1,000+ brands and generating INR 1,600 Cr in annual NOI, Blackstone’s Nexus Select Trust REIT listing in 2023 kick-started retail-led REITs in India,” adds Kejriwal. “It established the sector’s credentials as a transparent, scalable, and professionally managed asset class. By 2030, at least two more retail REITs are expected to enter the Indian market.” 

E-commerce is not a spoilsport 

India’s e-commerce penetration remains around 8%, far below the 20%-plus levels seen in China and the US. “Brands here are increasingly going ‘phygital’, with offline stores now experiencing and trust-building centres while online platforms drive scale,” says the report. 

Many leading D2C brands report that offline conversions are 2-3 times higher than online. In India, physical retail has retained its relevance in a digital age. “In the U.S. and Europe, malls are contending with oversupply, declining footfalls, online cannibalisation - and the looming spectre of repurposing into other formats. In contrast, the Indian retail market has limited quality supply, rising incomes, heavy footfalls, and rapid brand expansion. In the first half of 2025, retail leasing in India rose almost 70% YoY, and new mall supply grew by over 160%.”