'Ghost' shopping centres expand 59% in 2023, largest rise in NCR: Report

Almost Rs 6,700 cr 'trapped' in gross leasable space of such shopping centres, it says

Ghost shopping centres, so called because more than 40 per cent of their retail space is vacant, increased 59 per cent to 13.3 million square feet (msf) in 2023 compared to the year before, said a report on Tuesday.

The "Think India Think Retail 2024" report, released by real estate consultancy Knight Frank, studied 340 shopping centres and 58 high streets in 29 Indian cities. There were 64 ghost shopping centres in 2023, up from 57 in 2022. The increase led to a value loss of 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 inventory of ghost shopping centres was in the National Capital Region (NCR) at 5.3 msf, which was 58 per cent higher than the 3.4 msf in 2022.

Mumbai followed with 2.1 msf and Bengaluru was third with 2 msf of ghost shopping centres.

Hyderabad was the only Tier-1 city to record a decline in ghost shopping centre inventory, dropping 19 per cent to 0.9 msf in 2023. The sharpest rise was in Kolkata, which recorded a 237 per cent increase to 1.1 msf, but from a low base of 0.3 msf in 2022.

However, the report said overall shopping centre vacancy in eight major Indian cities improved to 15.7 per cent in 2023 from 16.6 per cent in 2022, indicating rising demand in the retail segment.

Excluding ghost shopping centres, the vacancy rate in the segment improved to 7.4 per cent.

"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 centres in 29 Indian cities have the potential to generate $14 billion in revenue in the Financial Year 2024-25.