India’s top 7 cities face retail space crunch: Anarock

Fresh supply of retail spaces in shopping malls fell 57 per cent to 0.9 million sq ft during January-June across seven major cities due to delays in construction activities, according to Anarock. The new supply of retail spaces stood at 2.8 million sq ft in the year-ago period. The seven major cities are — Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata. Real estate consultant Anarock reported that gross leasing of retail spaces in malls stood at about 4.1 million sq ft in the first half of the 2026 calendar year, a 24 per cent decline from the corresponding period of the preceding year. The consultant attributed the lower supply of retail spaces in malls to various reasons, including land availability, rising land cost, higher capex commitment compared to housing projects and the delay in government approvals.  Anuj Kejriwal, CEO - Retail & CEO — Europe, Middle East & Africa at Anarock Group, said, “The supply problem is cumulative and escalating - data of India’s top seven cities over the past 16 years shows a persistent mismatch between Grade A retail supply and leasing demand.”

While new mall completions fluctuated sharply on a year-on-year basis, he noted that the leasing demand has steadily absorbed available Grade A space, pushing vacancy rates lower.

“We now have a chronically supply-constrained market where retailers’ biggest challenge is not drawing shoppers but finding the right spaces to serve them in,” Kejriwal said.

On the demand-supply scenario of the past three calendar years, Anarock said the top seven cities added 5.3 million sq ft of new Grade A retail supply in 2023 against gross leasing of 6.5 million sq ft.

During 2024, new supply fell sharply to just 1.1 million sq ft, while leasing stayed at 6.5 million sq ft.

While new mall supply recovered partially in 2025 with 5.2 million sq ft of new completions, leasing surged to a record 13 million sq ft, the consultant said.

“The shortage of Grade A mall space is not simply a function of developers failing to respond to demand. Building a successful large-format retail asset is considerably more complex than delivering other forms of real estate,” Anarock observed.

The consultant noted that the development of a Grade A mall requires a large and contiguous land parcel in a strategically located catchment.

“The availability of suitable land is itself a constraint in established urban markets, while rising land costs can make new projects difficult to structure. Approval timelines, financing conditions and construction schedules can further delay project delivery,” Kejriwal said.

The vacancy levels have dropped to 6.7 per cent in H1 2026, according to Anarock.