Retail real estate sees higher leasing in H1 2025, driven by stable demand

Retail leasing in India rose 21% in H1 2025 compared to the previous year. Experts predict significant new supplies in Delhi NCR, Mumbai, and Hyderabad in H2 2025.

A strong retailer sentiment and rising retail consumption, supported by robust macroeconomic fundamentals, have led to a resurgence in the Indian retail real estate segment’s leasing patterns, according to industry executives. This positive sentiment is reflected in the uptake in leasing volume, which rose 21 per cent to 4.5 million square feet (msf) in the first half of calendar year 2025 (H1 2025), up from 3.7 msf in the same period last year, according to Cushman & Wakefield.

 

These figures are for the top seven cities, which include metropolitan regions such as Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, and Pune.

   

Suvishesh Valsan, Head of Research (India) at C&W, said that factors driving this growth include rising discretionary incomes, new brands entering the country, the expansion of existing retailers, and the growing transition of consumers towards premiumisation.

 

“We have observed healthy growth in H1 2025 leasing volume (malls and prominent high streets combined) on a year-over-year basis, which shows that the appetite for quality retail spaces remains very strong,” he added.

 

Of the leasing recorded in H1 2025, malls accounted for 37 per cent, up from 32 per cent in H1 2024, while high streets lost ground, dropping from 68 per cent last year to 63 per cent in H1 2025. 

 

The rise in mall share comes on the back of a strong Q2 2025 (April to June period), with the segment accounting for 45 per cent of leasing volume (1.01 msf)—the highest mall share in the past five quarters.

 

However, numbers suggest a drop in new Grade A mall supply. “No new mall supply was added in Q2, and Grade A mall completions for H1 2025 stood at 1.3 msf,” an analyst noted.

 

Looking forward, Valsan said that H2 2025 is likely to see a significant influx of new supplies, estimated at nearly 4 msf, especially within Delhi NCR, Mumbai, and Hyderabad.

 

“This should help bring more balance to the market and open up fresh opportunities for retailers to expand in line with evolving consumer expectations,” he added.

 

The rise in malls, however, coincides with changing consumer demographics, with convenience ruling the roost through online shopping and quick commerce.

 

To counter this, retail brands are now looking at re-strategising expansion by focusing on high-consumption interface categories.

 

Consultancies such as Anarock and C&W suggest that apparel and food and beverages (F&B) now represent a combined 54 per cent of total retail leasing (around 2 msf) in H1 2025 across these cities, up from 37 per cent in 2023.

 

These were followed by entertainment zones, which accounted for 16 per cent, and home and lifestyle brands, which represented 11 per cent.

 

“Backed by changing consumer preferences, categories of high-value consumption like beauty and wellness, F&B, sports, and jewellery have been gaining traction across malls in the last few years,” an Anarock report stated.

 

Despite currently holding the maximum share, apparel is seeing a decline in leasing, dropping from 42 per cent in FY19 to 37 per cent in FY25. It is further projected to reach 32 per cent by FY30.

 

Anuj Kejriwal, Chief Executive Officer (CEO) and Managing Director (MD) at Anarock Retail, said that apparel brands’ drop in leasing share mirrors that of other value-buy categories like hypermarkets.

 

“They face stiff competition from e-commerce, which is further compounded by the growing traction of quick commerce,” he added.

 

On the other hand, F&B saw its leasing share increase from 8 per cent in FY19 to 12 per cent in FY25, with projections to rise further to 16 per cent by FY30.