Over 16.6 million sq ft of new Grade A mall space is expected to added in India’s top seven cities between 2025 and 2026, according to a new report by real estate services firm Anarock.

This rise in retail space will be led by Hyderabad and Delhi-NCR, which will together account for 65 per cent of the upcoming supply, signaling a growing focus on high-growth consumption hubs. This development is part of a broader retail pipeline projected to add more than 40 million sq ft of mall space across key urban centers by 2029.

This surge in development is largely driven by a shortage of new Grade A mall supply in recent years, says Anuj Kejriwal, CEO & Managing Director, Anarock Retail. In 2022, only 2.6 million sq ft of new supply entered the top seven cities, while leasing hit 3.2 million sq ft Similarly, in 2023, 5.3 million sq ft of retail space was added, compared to 6.5 million sq ft. leased.

The gap widened further in 2024 due to delays in project approvals during India’s general and state elections. Just 1.1 million sq ft of new Grade A supply was added during the year, while leasing remained strong at 6.5 million sq. ft.

Despite the potential for oversupply, mall leasing across the top seven cities will exceed 12.6 million sq ft over the next two years, estimates Anarock. This will be driven by robust consumer demand and the entry of over 60 international brands across fashion, electronics, lifestyle, and F&B since 2020.

Mall vacancy rates are expected to decline to 8.2 per cent in 2025 and 8.5 per cent in 2026, from 15.5 per cent in 2021.

Beyond metros, Tier II and Tier III cities are emerging as key retail growth markets due to rising disposable incomes and greater digital penetration. E-commerce adoption has soared in these areas, now accounting for 65 per cent of online shopping, and is expected to maintain its lead through FY 2030.

Having doubled from 140 million in 2020 to 260 million in 2025, India’s online shopper base is forecast to reach 700 million by 2035.