According to Crisil Ratings, mall space in India is expected to expand by 30 to 35 million square feet (msf) in the next three to four years, which is a third of the existing inventory.

This growth is driven by a strong recovery in retail sales in the last financial year. The ongoing retail recovery is expected to continue, supported by widespread consumption across regions and sectors, strengthening demand resilience, the report said.

Mall owners are projected to achieve sales of about 125 percent of pre-pandemic levels in the current fiscal year.

“Malls are expected to attract investments of more than ₹20,000 crore in the next three to four years,” says Anand Kulkarni, director, Crisil Ratings.

Resumption of work on new offerings that had stalled during the pandemic and robust retail sales in malls are the reasons for the significant expansion in offerings, says Kulkarni.

The upcoming extensive offering has two key features. First, it has geographical diversity, with Tier 2 cities accounting for 25 percent of future mall space. This highlights a growing trend of consumption beyond traditional metros and tier 1 cities and contributes positively to the risk profile of mall owners.

Secondly, strong investor interest is expected to support the expansion, with Crisil Ratings predicting that 15 to 20 percent of investments will come in new offerings from companies such as private equity, global pension funds and sovereign wealth funds.

Still, it is important to monitor the potential impact of rising interest rates and inflationary pressures on discretionary spending, as these factors could impact mall performance in the future, according to the report.