Demand for spaces in malls pushed retail leasing to all-time high in 2023

Among the sectors, retail leasing was led by fashion and apparel which accounted for around 32 per cent of the total

In 2023, the retail sector in India recorded an all-time high leasing of 7.1 million square feet across the top eight cities in India, 47 per cent higher than in 2022, according to a report released on Wednesday. The demand for retail spaces was led by primary leasing in recently completed malls.

According to CBRE's "India Market Monitor Q4 2023", retail spaces in malls accounted for a 30 per cent share of total absorption.

Leasing saw an uptick in the second half of the year after foreign investors announced some big investments in Indian companies. These include Qatar Investment Authority's $1 billion and Abu Dhabi Investment Authority's $598 million investments into Reliance Retail and $420 million investment by undisclosed investors in Pharmeasy.

Among the sectors, the retail leasing was led by fashion and apparel, which accounted for around 32 per cent of the total. According to CBRE, this was largely influenced by mid-range fashion value and athleisure brands.

In July 2023, Canadian lingerie retailer La Vie en Rose made its debut in India in partnership with Apparel Group India and launched its first store in Delhi-NCR. It later expanded in Pune and Bangalore.

Other notable expansions by international players include French fashion and apparel brand Bugatti Fashion and American lingerie brand Victoria's Secret.

The fashion category was followed by homeware & department stores, which accounted for a 17 per cent share. It was then followed by food & beverage with a share of 12 per cent.

Notably, luxury brands, which accounted for 9 per cent of all retail leasing, saw rapid expansion in the country.

"The luxury sector, which saw a 162 per cent increase in 2023, shows a promising trend with the entry and expansion of international brands," said Anshuman Magazine, chairman and chief executive officer (India, Southeast Asia, West Asia and Africa) at CBRE.

According to the consultancy, luxury brands will continue to expand their footprint across various retail formats, including malls, high streets, and premium standalone developments.

Retail leasing outlook for 2024

In the report, CBRE said that consumer spending, as well as retail sales, are expected to be lower in 2024 as compared to 2023. "Retailers across categories will need to be realistic around the expected growth in a high inflationary and cautious economic environment."

Moreover, retailers will continue to innovate in-store experiences to increase consumer engagement.