Ghost malls witness a 59% year-on-year rise in India

The "Think India Think Retail 2024" report, published by real estate advisory firm Knight Frank, examined 340 shopping centers and 58 high streets across 29 Indian cities.

The report identified 64 ghost shopping centers in 2023, a rise from 57 in 2022. This increase resulted in a depreciation in value amounting to Rs 6,700 crore.

"As nearly $798 million (Rs 6,700 crore) is trapped in the gross leasable space of these non-performing shopping centres, consolidation of retail asset portfolios by institutional investors…proactive steps by mall developers to either repurpose or demolish these structures will provide new opportunities for interested players for land monetisation," said the report.

In Tier-I cities, the largest stock of vacant shopping centers, known as ghost shopping centers, was observed in the National Capital Region (NCR), totalling 5.3 million square feet (msf) in 2023, marking a 58% increase from the 3.4 msf recorded in 2022. Following NCR, Mumbai accounted for 2.1 msf, with Bengaluru ranking third at 2 msf of ghost shopping centers.

The report highlights a 238% year-on-year increase in the Gross Leasable Area (GLA) of all shopping centers in prime Indian markets in 2023, alongside an increase in the number of ghost malls from 57 to 64.

Among Tier-1 cities, Hyderabad was the sole city to witness a decrease in ghost shopping center inventory, experiencing a 19% drop to 0.9 msf in 2023. Conversely, Kolkata saw the most significant surge, with a 237% increase to 1.1 msf, albeit from a low base of 0.3 msf in 2022.

However, the report highlighted an overall improvement in shopping center vacancies across eight major Indian cities, decreasing to 15.7% in 2023 from 16.6% in 2022, indicating a growing demand in the retail sector.

Excluding ghost shopping centers, the vacancy rate in the segment improved to 7.4%.

"It is prudent to exclude such assets, as this stock does not attract widespread retailer interest due to various constraints, including poor location, obsolete design, strata-sold arrangements, and the dilapidation and unattractiveness of the structures," said the report.

Shopping centers across 29 Indian cities are projected to have the capacity to generate $14 billion in revenue for the Financial Year 2024-25.