India's retail leasing hits record 8.9 mn sq ft in 2025, Hyderabad leads

Retail Leasing Soars Even as Supply Jumps 268% in 2025

 

India's retail leasing touched a record 8.9 million square feet in 2025, even as fresh supply rose sharply to 4.3 million sq ft, a 268% jump over 2024, according to a new report by CBRE South Asia. 

 

The surge in new completions was led by Hyderabad, which accounted for over half of the annual supply additions, followed by Mumbai and Delhi-NCR.

 

India’s retail real estate market closed 2025 on a strong footing, defying global macro headwinds and tariff-related uncertainties, as retailers doubled down on physical expansion across top cities.

 

Despite global volatility, retailers—both domestic and international—are committing capital to India’s consumption story, with a sharp focus on quality assets and experience-driven formats.

 

Retail momentum remained particularly strong in the second half of the year. Between July and December 2025, 2.1 million sq ft of new retail space became operational, while retail absorption jumped to 5.6 million sq ft.

 

Hyderabad led demand with a 34% share, followed by Delhi-NCR (20%) and Chennai (16%), reflecting the growing depth of organised retail beyond traditional metro strongholds.

 

According to Anshuman Magazine, Chairman and CEO, India, South-East Asia, Middle East & Africa at CBRE, the leasing surge reflects a decisive pivot by retailers toward experience-led growth. 

 

Retailers are increasingly experimenting with flagship stores, kiosks, and Gen Z-focused formats to boost footfalls, dwell time, and brand engagement, he said.

 

Fashion and apparel players continued to dominate leasing activity, accounting for 48% of total absorption in 2025. Store launches spanned a wide spectrum—from sustainable labels and streetwear to ethnic, athleisure, luxury and direct-to-consumer (D2C) brands.

 

Technology is playing a growing role in shaping store strategies. AI-led tools such as generative styling engines, virtual try-ons, and predictive inventory models are helping brands personalise experiences, reduce returns, and improve space productivity—strengthening the case for physical retail rather than weakening it.

 

Food and beverage (F&B) brands emerged as the second-largest demand driver, contributing 12% of total leasing, with a clear preference for large-format, experiential outlets in premium malls and high-street locations. Jewellery followed with an 8% share, with lab-grown diamond brands increasingly driving store expansions and diversifying the traditional gold-led tenant mix.

 

D2C and International Brands Stay Active

 

While domestic players continue to dominate leasing volumes, international brands remain firmly in expansion mode, even amid concerns around global tariffs and macro pressures.

 

Within domestic retail, D2C brands accounted for 27% of total leasing in 2025, highlighting a sustained push toward offline presence to improve execution, customer acquisition economics, and long-term viability.

 

According to Ram Chandnani, Managing Director, Leasing Services, CBRE India, retailers also benefited from supportive domestic conditions in the second half, including low inflation, income tax revisions, and GST rationalisation, which helped underpin consumption demand.

 

One of the more structural shifts highlighted in the report is the evolution of entertainment zones within malls. These spaces are increasingly being repositioned as technology-enabled hubs, leveraging edutainment, virtual reality, and gamified RFID-based loyalty systems.

 

For landlords, these zones are proving valuable from a yield perspective—allowing the monetisation of large, windowless spaces while also enabling premium rentals for adjacent F&B tenants. Longer lease tenures and higher engagement levels are also improving income visibility and asset valuation.

 

As Magazine noted, these formats blend multi-generational appeal with stable, long-term cash flows—an increasingly attractive combination for retail asset owners.