According to a recent report by JLL India, smaller cities, particularly Tier-II and Tier-III locations, are expected to witness a substantial increase in retail supply, with 25 million square feet (msf) projected by the year 2029. This expansion is driven by increasing consumer demand, availability of land, and a historical lack of quality retail developments in these markets.

Mr. Samantak Das, Chief Economist and Head of Research and REIS at JLL, highlighted that North Indian Tier-II and Tier-III cities, such as Ludhiana, Jaipur, and Lucknow, will account for 44% of the total upcoming retail supply. In contrast, southern India is projected to contribute 30%, with cities like Coimbatore, Malappuram, Thrissur, and Trivandrum leading this growth trajectory. The eastern region, primarily driven by Guwahati, is set to see a supply of 4.5 msf.

In western India, major developers are initiating large-scale, high-quality retail projects in emerging cities such as Goa, Surat, and Ahmedabad. Developers are strategically acquiring land parcels in these cities to establish new retail projects. According to Mr. Rahul Arora, Head of Retail Services and Office Leasing Advisory at JLL India, leading real estate developers have increasingly invested in land for retail development in Tier-II and Tier-III cities.

Notably, 30% of institutionally held retail assets are located across 12 of these cities, reflecting the appeal of lower land costs and the rising aspirations of consumers in smaller urban areas. Key cities identified in the report include Amritsar, Chandigarh, Ludhiana, Udaipur, and Mohali in the north; Mysuru and Mangalore in the south; Ahmedabad, Surat, Indore, and Nagpur in the west; and Bhubaneswar in the east.

The growing retail landscape in these smaller cities underscores a significant shift in consumer behavior and market dynamics. As the aspirations of consumers rise in these urban areas, the demand for quality retail experiences is also expected to increase, prompting developers to enhance their investment strategies. This burgeoning retail supply not only promises to meet the increasing consumer demand but also creates opportunities for job creation and economic growth in these regions.

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