A new report by Knight Frank has revealed that India's small malls are increasingly turning into ghost malls as consumers are moving towards online purchases and bigger shopping centres for a better experience.
Ghost malls refer to those malls with a vacancy rate of more than 40%.
Rise in ghost malls
As per real estate consultancy Knight Frank in India, the number of ghost malls rose to 64 from 57 in 2022. Meanwhile, there was a 238% year-on-year increase in the Gross Leasable Area (GLA) of all shopping centres in prime Indian markets in 2023.
"Many of the small shopping malls are on the verge of closure," said Gulam Zia, director of Knight Frank after the release of the "Think India Think Retail 2024" report based on a survey of 29 top cities
As per Industry analysts, this reflected weak consumer demand and could lead to job losses and economic dislocation, particularly for small retailers and service providers. Private consumption which accounts for 60% of India's gross domestic product has remained weak as it rose only 3.5% in the last quarter of 2023 while the economy grew 8.4%
The Knight Frank report also mentioned that there has been a sharp rise in low-performing retail assets with 13.3 million square feet of shopping space remaining vacant, resulting in the loss of 67 billion rupees ($802.5 million) of revenue for developers in 2023.
Gulam Zia further said that many small mall owners are caught in a downward spiral of declining revenue as they are unable to match the convenience and diversity of large shopping centres.
As per the report, about 132 small shopping centres with an average leasing area of 100,000 square feet are on the verge of turning into ghost malls – with the vacancy rate rising to 36.2% in 2023 from 33.5% in the previous year.
Meanwhile, the vacancy rate among middle-level shopping malls stood at 15.5% and the rate among bigger shopping malls, with an average leasing area of 500,000 square feet remained at 5%.
The total number of shopping malls declined to 263 in 2023 in top eight cities including Delhi, Mumbai and Bengaluru, with eight new retail centres added but 16 shut down.
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