Delhi haunted by highest number of ‘ghost malls’, 1.14mn sq ft space lies empty in Mumbai

India’s retail sector was projected to grow at a rate of 9% between 2019-30 and sales of brick and mortar stores were on track to hit Rs 10,000-12,000 crore in FY20. But then the pandemic struck and malls and markets bustling with activity were left deserted across India, as store owners struggled to pay rents. Two years later, footfalls at malls are close to pre-pandemic levels and markets are crowded, but many of the 255 malls across eight metro cities of India are struggling to rent out space.

A report by property consultant Knight Frank, has shed light on a ‘ghost mall’ problem in Indian cities, which has caused a $524 million loss. A lot of malls with lower than 40 per cent occupancy have emerged in metropolitan India, with 57 malls in eight cities facing varied degrees of deterioration in the post-pandemic era. Among metros, Delhi’s malls had the most vacant space at 40 per cent, followed by Bengaluru at 18 per cent and Hyderabad at 16 per cent.

Enormous land and capital to be unlocked

The report cited lack of due diligence and flawed layouts as reasons behind the dilapidation of malls, while recommending repurposing malls as a solution since efforts to increase footfalls and attract retailers have failed. At 8.4 million square feet, these ghost malls occupy a lot of real estate and capital which can be unlocked by turning to alternate usage.

Not an entirely gloomy scenario

In sharp contrast to the deserted shopping spaces in metro cities, new malls are expected to come up in tier 2 and tier 3 cities, while 10 million square feet is already available for retailers. Knight Frank’s report also had positive news on retail sales in malls, which are expected to touch $39 billion by 2028. It should also be noted that 31 new malls are in the pipeline and will be open for consumers in the next couple of years.

Mall operators had already lowered rents during the pandemic, allowing India’s top 10 retailers to save Rs1500 crore during the covid lockdown. But things are looking brighter for malls, with ICRA predicting a 30% increase in rental income for FY23.