Defies Global Slump, Set to Attract $3.5 Billion in Investments Over Three Years: Anarock

As shopping malls across the United States and Europe grapple with rising vacancies and store closures, India’s organized retail sector is emerging as a rare global outlier, drawing strong interest from international brands and institutional investors. According to data from Anarock Research, India’s Grade-A retail market is expected to attract over $3.5 billion in capital inflows over the next three years, driven by severe supply constraints, rising consumption and resilient footfall growth.

The contrast with Western markets is stark. Since 2020, the US has recorded a net closure of nearly 1,200 mall stores, even as new store openings rose 78% over the past two years. Vacancies have forced almost 40% of underperforming malls in the US to be rezoned or repurposed. India, by comparison, is seeing near-full occupancy across most top-tier retail assets.

“India is witnessing a demand–supply imbalance that is virtually unheard of in global retail markets,” said Anuj Kejriwal, CEO – Retail Leasing and Industrial & Logistics, Anarock Group. “Grade-A malls are operating at 95–100% occupancy, with waitlists in prime zones, even as more global brands look to enter or expand.”

Foreign brands bet big on India

Anarock data shows that over 88 foreign brands entered India between 2021 and the first nine months of 2025, spanning fashion, electronics, lifestyle and food & beverage segments. Several more international retailers are currently scouting for space, particularly in large, institutional-grade malls in metro cities.

The surge in interest is underpinned by India’s extremely low organised retail penetration. Per capita retail stock in Tier-I cities stands at just 4–6 sq. ft. and drops to 2–3 sq. ft. in Tier-II and Tier-III cities. Grade-A mall space is even scarcer, at around 0.6 sq. ft. per capita. In contrast, the US averages nearly 23 sq. ft. per capita, while China exceeds 6 sq. ft.

“This level of undersupply, combined with rapidly rising incomes, has pushed rental growth well past pre-pandemic levels,” Kejriwal said, adding that leasing cycles in India are now outpacing construction timelines — a rarity in global retail real estate.

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Consumption shifts favour quality malls

India’s broader consumption outlook is also bolstering investor confidence. The country is projected to become a $6 trillion consumption economy by 2030, powered by a young demographic, urban expansion and steady income growth.

Unlike malls in the West that struggle against e-commerce, Indian malls have evolved into lifestyle destinations. Entertainment, dining and social experiences now account for 30–35% of footfalls, helping malls retain relevance in the digital age. According to industry estimates, weekday footfalls at leading malls exceed 20,000, rising beyond 40,000 on weekends.

E-commerce, rather than disrupting physical retail, has largely complemented it. With online retail penetration in India still at around 8%, compared to over 20% in the US and China, many brands are pursuing a ‘phygital’ strategy. Several direct-to-consumer players report offline conversion rates that are two to three times higher than online, reinforcing the role of physical stores as trust and experience hubs.

Investor appetite sharpens

India currently has over 600 operational malls, but fewer than 100 qualify as institutional-grade assets, intensifying competition for quality portfolios. The sector received a major boost in 2023 with the listing of Blackstone-backed Nexus Select Trust REIT, which owns 19 malls, houses over 1,000 brands and generates approximately Rs 1,600 crore in annual net operating income.

The listing established retail real estate as a scalable and transparent investment avenue, and Anarock expects at least two more retail-focused REITs to enter the market by 2030.

From a returns perspective, Indian Grade-A malls typically generate 14–18% internal rates of return (IRRs) — nearly double the yields available in many Western markets. Low vacancy levels, rental escalations and revenue-sharing models linked to consumption growth continue to enhance their appeal.

“In the US and Europe, malls are battling oversupply and declining footfalls,” Kejriwal said. “India, on the other hand, offers rising consumption, limited quality supply and strong brand expansion. That combination is what global capital is chasing today.”