Changing landscape: India's subpar, ageing malls set for overhaul

Developers converting older malls to mixed-use integrated districts, buoyed by investor interest

Older and lower-tier malls — categorised as B and C grade — across Delhi-NCR, Mumbai, Bengaluru, Hyderabad and Chennai are now being considered for redevelopment as consumer behaviour beyond metros evolves and prime land in these top cities becomes even more scarce.

 

These malls are expected to be converted into integrated districts with homes, offices, leisure, hospitality and experiential retail. This model, known as mixed-use development, is becoming popular with developers.

 

“Post-Covid, malls are being built with a very high experience quotient, which was lacking before,” said Muhammad Ali, chief executive officer (CEO), retail, Prestige Group.

 

With online shopping gaining ground, he added that malls must offer compelling experiences supported by events, promotions, and sophisticated design.

 

Industry stakeholders say this shift is both structural and imminent as the pandemic has reshaped expectations of physical retail. It is pushing developers to rethink the design and purpose of malls.

 

Older malls — many designed before global best practices became commonplace in India — are struggling to meet these demands.

 

“Single-use retail formats are giving way to mixed-use ecosystems,” said Bhavik Bhandari, chief business officer, Ashwin Sheth Group.

 

Nearly 35–40 per cent of the country’s grade A retail stock is now over a decade old. And, close to 20 per cent of older malls are being evaluated for mixed-use redevelopment, he added.

 

Bhandari, whose firm is evaluating select retail assets that show strong potential for repositioning, added that mixed-use projects in India generate 12–15 per cent higher rental yields than standalone retail. This makes them more attractive to investors seeking stable and diversified returns.

 

Quoting recent CBRE data (which is the world's largest commercial real estate services and investment firm), he stated that nearly 30 per cent of new retail supply planned for 2026–2028 will be part of mixed-use developments.

 

India has around 650 operational malls, but only 30–35 per cent meet institutional-grade standards today, according to Anarock. About 30–40 per cent of smaller malls nationwide may be repurposed into mixed-use developments in the coming years.

 

From a valuation perspective, redevelopment often unlocks far greater potential than continued retail use. Redeveloped malls typically see a one-to two-fold or more than that increase in footfalls, driven by upgraded tenants. The industry stakeholders point out that the transition also aligns with the broader institutionalisation of retail real estate, where investors increasingly prefer high-quality, diversified assets.

 

Sahil Verma, chief operating officer (COO), Shray Projects, which is currently advising 4–6 redevelopment mandates across NCR, Mumbai, Bengaluru, and Pune, with a combined value exceeding Rs 2,500 crore, said that reimagining older malls on prime land can generate 2.5–3x the value of a standalone retail asset.

 

Ashwin Seth group’s Bhandari said that well-executed redevelopments typically deliver 18–20 per cent internal rate of return.

 

Redevelopment interest is also being buoyed by institutional capital, with retail attracting $378 million in private equity investments in 2025 so far, up from $285 million in 2021, according to data from Savills India. 

 

Rising aspiration and purchasing power in cities such as Chandigarh, Indore, Surat, Bhubaneshwar, and Coimbatore are attracting institutional capital and new mixed-use formats.

 

Anuj Kejriwal, CEO - retail leasing and industrial & logistics, Anarock Group, said, “Operator onboarding is the current trend seen in the retail market, wherein a large mall operator acquires a grade B/C or smaller malls. The recent acquisition of Kolkata’s South City Mall by Blackstone (for Rs 3,250 crore) is a classic example of this. Moreover, the share of institutional investors is gradually increasing due to the Indian retail real estate sector’s rapid evolution from fragmented, quantity-driven growth to quality, institutional consolidation.”

 

According to Anarock Research, leading players such as Nexus Malls, Phoenix Mills, DLF, Lakeshore, Raheja, and Pacific collectively operate 58 malls totalling 34 million square feet (msf), with more than 42.5 msf of new space planned over the next 3–5 years.