India’s retail sector goes premium! Grade A+ malls drive 29% rent surge; beauty, F&B new anchors

India’s retail real estate sector is undergoing a structural transformation, driven by a new wave of premiumisation, leading to a more sophisticated, experience-driven retail ecosystem. Grade A+ malls are driving premium retail in India as rents surge up to 29% since 2019, with superior malls (Grade A+) accounting 39 million sq. ft. across India’s top 8 cities and maintaining an average vacancy rate of just 3-4%, according to the latest report “Premiumisation of India’s Retail Sector – Upscaling, Upgrading and Evolving” by real estate consultancy major Cushman & Wakefield.

Over 70% of the 12.3 million sq. ft. (msf) of new Grade A mall supply expected over the next two years will be Superior Grade (Grade A+), the report says, marking a significant upgrade in quality and experience across India’s upcoming retail infrastructure.

Of the 12.3 million sq. ft. of new Grade A mall supply projected across 2025 and 2026, 8.6 million sq. ft. will be superior grade, which signals the sector’s shift from scale to quality.

Notably, the superior-grade malls typically owned and operated by reputed developers or institutional investors are characterised by their high occupancy rates (more than 85%), upscale tenant mix, and service-rich environments.

India’s total Grade A mall stock stood at 61.5 million sq. ft. in 2024, with superior grade malls already comprising 63% (38.9 million sq. ft.) of the total. These malls are outperforming their peers, with stock-weighted average rents rising by 29% since 2019, currently averaging Rs 315 per sq. ft. per month, the report adds. These premium malls saw rents rise from ₹245 to ₹315 per sqft/month (29%) post-COVID, showing strong demand from high-end brands.

Among the cities rising in the luxury retail wave are metros like Delhi-NCR, Mumbai, Bengaluru and Pune, with Delhi-NCR alone accounting for 21.75 MSF in the Grade-A mall stock. Additionally, the report says, the superior grade assets within these metros are witnessing strong investor and retailer interest, driving rental growth and low vacancy rates of around 3-4%.

Saurabh Shatdal, Executive Managing Director, Capital Markets & Head, Retail India, Cushman & Wakefield, says the rise of superior grade malls reflects a clear pivot from just scale to quality and experience. "Today’s consumers are seeking curated, design-led environments where the brand experience is as important as the product itself. Categories like beauty, wellness, F&B, and athleisure-known for high engagement and trading density-are shaping this next phase of retail."

Shatdal says the response from developers and brands shows a "deep shift" in strategy toward sophisticated, digitally integrated, and future-ready retail formats, which resonate with the country’s aspirational consumers.

Speaking about the retail landscape in Delhi-NCR, Aman Sharma, Founder and MD of Aarize Group, says the current trend in the retail space marks a clear shift toward experiential, high-end retail formats in urban centers. "Looking ahead, the future of retail in Delhi-NCR lies in well-curated, experience-led destinations that seamlessly integrate shopping, dining, and lifestyle. As both global and domestic brands scale their presence, the region is poised to become a leading hub for next-generation retail in India.”

What's fuelling demand for premium retail spaces?

The report attributes this shift to the rise of India’s affluent and aspirational middle class. With the country's median age under 30, younger consumers are embracing lifestyle upgrades and experiential consumption. As digital-first premium brands transition to offline formats, they are increasingly choosing Grade-A malls or prominent high streets to establish physical footprints. This premiumisation has also impacted the mall leasing landscape as value brands are gradually losing share in superior malls, while lifestyle, premium, and luxury categories are gaining prominence.

Beauty, F&B, and Athleisure are new anchors in Indian malls

Premiumisation is also reshaping the brand mix and category spread within malls, with beauty & wellness, food & beverage (F&B), and athleisure seeing significant growth in mall footprints. The beauty & wellness segment now commands trading densities of ₹8,000-₹12,000/sqft/month and has doubled its mall footprint from 6-8% pre-COVID to 15-16% in 2024.

Food & Beverage (F&B) has also become the new anchor category, growing from 6-8% to 15-18% in mall footprints. Athleisure saw growth from 6–8% to 11–13%, reflecting consumer focus on comfort and wellness. The report also notes a modest yet promising rise in jewellery and Consumer Durables Information Technology (CDIT) categories, reflecting India’s expanding appetite for premium experiences.

Value segments like hypermarkets and cinemas are losing steam

The share of traditional anchors such as hypermarkets and cinemas is declining, while fashion, beauty, wellness, and experiential dining are emerging as key drivers of footfall and spend, the report adds. Cinema occupancy has dropped from 28-33% pre-COVID to 18-20% in 2024, attributed to OTT dominance and weak theatrical content. Similarly, the department stores and hypermarkets, previously key anchors, have seen their mall footprint fall from 22-28% to 15-20%, which has been impacted by quick commerce growth and changing habits of people.

Premiumisation across high streets of India

Owing to limited space availability in superior grade malls, the report says many brands are locating their stores in prominent high streets across the top 8 cities. Prominent high streets include locations such as the Linking Road in Mumbai, Khan Market and Connaught Place in Delhi, M.G. Road in Bengaluru, among others. Though these are considered unorganised supply in many ways, the prominent high streets offer brands the benefit of direct visibility to passing shoppers. Over the years, prominent highstreets have seen their rentals surpass pre-COVID peak of 2019 and have been moving upwards gradually ever since.