NCR Hits ~0–2% Vacancy, Mumbai Rents Surge 20% YoY - ANAROCK-IMAGES
Report
- Vacancy
rates in NCR b/w ~0–2% across Grade A/A+ malls, effectively translating to
full occupancy in key assets; developer confidence sparks a 19 million sq.
ft. new retail supply pipeline in the region b/w 2026 to 2031
- Mumbai
also exhibits upward momentum, with recent leasing transactions reflecting
~15–20% Y-o-Y rental growth
- Over
45 Mn sq. ft. new retail supply expected to enter top 7 cities b/w 2026 to
2031
- Meanwhile,
based on current Grade A stock across the top 7 cities & prevailing
capital values, the investment opportunity is estimated at ~USD 25–30 Bn,
driven by both existing institutional-grade assets & the pipeline of
new developments expected to mature by 2030
- Simultaneously,
a significant redevelopment opportunity exists across ~40–50 Mn sq ft of
underperforming Grade B/C malls & poorly planned retail assets across
top cities
Mumbai, 13 May 2026: India’s Grade A/A+ retail market is
witnessing a historic tightening of supply, with top-tier destination malls in Delhi-NCR
and Mumbai (MMR) effectively reaching full occupancy.
According to the report ‘Leasing Trends in Malls Across Top
Metropolitan Cities in India’, by ANAROCK and Images Group unveiled at
the Phygital Retail Convention in Mumbai today, vacancy
rates in Delhi’s key assets have plummeted to 0–2%, while Mumbai
has recorded the country’s sharpest rental appreciation at 15–20% year-on-year.
Anuj Kejriwal, CEO – Retail & CEO – EMEA, ANAROCK Group, says, "On a
year-on-year basis, Delhi-NCR’s Grade A+ malls have witnessed
a stronger rental appreciation of ~8–12%, outperforming Grade A
assets at ~6–8%, indicating a widening gap driven by superior footfalls, tenant
productivity, and asset positioning. This trend reinforces the
flight-to-quality observed among retailers, with top-tier malls capturing
disproportionate demand."
The NCR retail market has ~19 Mn sq. ft of
upcoming supply projected through 2031, reflecting strong developer
confidence and continued retailer interest in the region. This pipeline is
characterized by a mix of Grade A and emerging Grade A developments, indicating
both institutional participation and the evolution of organized retail across
micro-markets.
“This surge in demand in the two realty hotspots is essentially powered
by aggressive expansion from international retailers and entertainment
anchors," says Kejriwal. "Notable recent transactions include Zara
and Levi’s at Pacific Mall (Tagore Garden) and the entry of Foot Locker at DLF
Mall of India, Noida. In Mumbai, the Phoenix Palladium and Jio World Drive
continue to set benchmarks, with premium monthly mall rents reaching as high as
INR 777 per sq. ft.”
“This period of growth is accompanied by a massive structural shift in
Indian retail, where Grade A+ assets are significantly outperforming the
broader market. The substantial 19 Mn sq. ft. pipeline planned for Delhi NCR by
2031 is a testament to the long-term confidence developers have in the Indian
consumer’s appetite for organized retail,” he adds.
Supply-Demand Dynamics & Vacancy Trend (Last 8 Years)
Meanwhile, the MMR retail pipeline is expected to witness a cumulative
supply addition of ~4 Mn sq ft between 2026–2031, indicating a steady
development trajectory. Supply is phased, with peak additions in 2028 (~1.80 Mn
sq ft), followed by 2027 and 2030 (~1.20 Mn sq ft each), while near-term supply
in 2026 remains limited (~0.25 Mn sq ft). Post-2030, supply tapers off,
reflecting a measured pipeline approach.
Other City Highlights:
- Bengaluru: The city remains a
resilient mid-range market with 5–8% vacancy and a healthy expansion focus
in the East and South corridors, led by anchors like Lifestyle and
Westside. The city is poised to witness a decent retail supply pipeline of
~5.03 Mn sq. ft. by 2031. The average mall rental in Bengaluru stands at
~₹200–250 per sq ft (chargeable, vanilla stores) across Grade A/A+,
indicating a relatively stable and mid-range rental market compared to
other Tier I cities. The market is further supported by healthy occupancy
levels, with vacancy rates in Grade A and above malls remaining low at
~5–8%, reflecting strong leasing traction and sustained demand from
retailers.
- Hyderabad: Emerging as a supply
powerhouse, Hyderabad anticipates 7.1 million sq. ft. by 2031. Hyderabad’s
Grade A mall ecosystem reflects a moderate rental environment, with the
city average for vanilla stores at ~₹200- 250/sq.ft. Asset-level
performance indicates a wide dispersion, with top-performing malls
achieving ~₹300-400/sq.ft. (↑ ~54% above city average), while
underperforming assets remain in the range of ₹168–₹176/sq.ft. (↓
~25–30%).
- Pune: Pune is seeing massive
activity with IKEA and Uniqlo driving headline deals. The city’s organized
retail market reflects stable rental benchmarks for vanilla stores, with
city-level averages indicating a mature yet steadily evolving consumption
landscape. As per the analysis, vanilla store rentals in Grade A
developments average ~INR 175-225 psf, with asset-level variations ranging
from ~INR 170 psf to ~INR 300 psf. This spread highlights the impact of
mall positioning, catchment affluence, and brand mix on rental
performance, with premium centres commanding significantly higher trading
values.
- Chennai: Chennai’s organized
retail market reflects stable but relatively moderate rental performance,
with average vanilla store rentals at ~INR 175–225 psf (chargeable) across
select Grade A developments. The limited sample size indicates a
concentrated, asset-driven market with minimal variance in rental
positioning.
- Kolkata: The city’s limited
upcoming supply of 1.85 Mn sq. ft. is expected to protect current rental
values despite a more conservative leasing pace. While
New Trends Across Cities
As the retail landscape evolves, the focus is shifting toward suburban
expansion. In Mumbai, upcoming new retail supply is increasingly concentrated
in Thane, Borivali, and Panvel, while Bengaluru sees growth along Sarjapur
Road. This trend suggests that while city centres are saturated, the next wave
of growth will be driven by residential catchments in peripheral districts.
Further, Indian retail real estate is emerging as one of the most
resilient and institutionally attractive asset classes within the commercial
real estate landscape. As highlighted in this report, Grade A/A+ retail assets
across key metropolitan markets are witnessing historically low vacancy levels
of ~0–2%, alongside sustained rental growth of ~6–10% year-on-year in Grade
A/A+ assets. This performance is further reinforced by a constrained near-term
supply pipeline and strong occupier demand, creating a favourable environment
for asset owners and investors alike.
Another key trend shaping the sector is the growing maturity of lease
structures, with ~74% of transactions now following hybrid revenue-linked
models and nearly ~75% of leases locked in for 3–7-year tenures. And, with a
calibrated upcoming supply pipeline, largely concentrated in high-growth
suburban micro-markets, the sector presents a strong development opportunity
aligned with urban expansion corridors.
Overall, the combination of ~USD 25–30 Bn core investment potential,
~40–50 MSF redevelopment scope, and sustained consumption-led demand is
expected to drive increased participation from institutional investors,
including REITs, private equity funds, and sovereign wealth capital,
positioning retail real estate as a key growth asset class in India through
2030.
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