Mall operators expected to clock revenue growth of 12-14% in FY26: Report

Crisil expects mall operators to post strong revenue growth in FY26, driven by new mall additions, robust occupancy, reduced GST rates and improved consumption trends

Mall operators are expected to clock healthy revenue growth of 12–14 per cent in the financial year 2026 (FY26), amid the ramp-up of malls acquired over the past two fiscals, the planned addition of new malls and the standard annual escalation in rentals, according to a report by Crisil.

 

The momentum is likely to persist next fiscal as well, with revenue growing in double digits.

 

The rationalisation and reduction of goods and services tax (GST) rates, combined with sustained economic growth, benign inflation, lower interest rates and an above-normal southwest monsoon, are expected to stoke consumption and, in turn, income from revenue share accounting for 10–15 per cent of the overall revenue of mall operators.

 

Overall occupancy is expected to further improve and remain around 94–95 per cent this and next fiscal after rising 350 basis points to 93.5 per cent in FY25. This will also be driven by operators maximising occupancy in malls commissioned or acquired over the past two fiscals.

 

Gautam Shahi, director, Crisil Ratings, said: “Assets added via organic and inorganic routes have been a growth driver for large mall developers and real estate investment trusts. Mall operators in our sample set have increased their retail space by 3 million square feet (msf) in two fiscals through 2025, mainly in tier 2 cities, as part of their growth and diversification strategies. Another 4.5–5 msf is expected to be added over this and next fiscal, which should drive annual revenue growth up 400 basis points. These factors and strong occupancy will enable sustained revenue ascent over the medium term.”

 

Lower interest rates, income tax relaxations and an above-normal monsoon have driven consumption growth at retail malls by 7 per cent in the first half of this fiscal compared with 4 per cent in the same period last fiscal. The momentum is likely to continue, with the reduced GST boosting consumer sentiment, footfalls and consumption across key tenant categories such as apparel, footwear, consumer durables and food and beverages.

 

Snehil Shukla, associate director, Crisil Ratings, said: “Debt levels are expected to rise this and next fiscal, primarily to fund ongoing expansions and planned asset and stake acquisition. Despite this, leverage will remain in check, supported by healthy operating performance. The debt-to-Ebitda ratio is expected to remain stable around 3.0 times for the current and next fiscal, compared with 2.9 times last fiscal.”

 

Any large debt-funded acquisitions by mall operators will, however, bear watching, Crisil added.