India's retail leasing market achieved a notable milestone in 2024, reaching approximately 6.4 million square feet of leased space across the top eight cities in the country. This impressive figure was driven by a positive outlook from retailers, who responded to growing consumer demand, especially in the latter half of the year (H2). Fashion and athleisure were the major contributors to this surge, with these sectors collectively accounting for 37% of the space leased. The mid-range, value fashion, and athleisure segments were particularly strong, reflecting the shift in consumer preferences towards comfort, versatility, and style in everyday wear.

Fashion and Athleisure Lead Retail Leasing Growth

Fashion and apparel have traditionally been the backbone of India’s retail sector, and in 2024, this trend continued as the fashion industry played a significant role in retail leasing growth. The athleisure segment, in particular, has seen a steady rise, with a growing preference for casual, active, and comfortable clothing. This shift aligns with global trends and India’s increasing inclination towards a more health-conscious lifestyle, making athleisure a core driver of demand for retail spaces. Mid-range and value fashion brands capitalized on this trend, attracting price-sensitive consumers without compromising on quality.

Additionally, other sectors such as homeware, department stores, and food and beverage also saw significant leasing activity. These segments have benefited from an increasing demand for home improvement products, dining experiences, and specialty food items, reflecting India's evolving consumer preferences and lifestyle choices.

Direct-to-Consumer (D2C) Sector Growth

The Direct-to-Consumer (D2C) sector also experienced growth, expanding by 7% in 2024. Fashion and apparel were again the key drivers of this growth, with D2C brands increasingly establishing a physical presence in high-traffic areas of the country’s major cities. Consumers are becoming more inclined towards brands that offer an authentic, personalized shopping experience, which is driving these companies to expand both online and offline.

Leasing Activity by City: Bengaluru Leads the Charge

The top eight cities in India accounted for the bulk of the retail leasing activity, with Bengaluru leading the pack in space absorption. The city’s dynamic retail ecosystem, fueled by strong consumer demand and the presence of both domestic and international retailers, makes it a key destination for retail leasing. Hyderabad and the Delhi-NCR region also played important roles, together accounting for 58% of the retail leasing activity in the second half of 2024.

The demand for retail space in these cities is expected to continue into 2025, with new retail developments, especially Grade A mall spaces, coming up in the most sought-after locations. These cities have proven to be resilient retail hubs, offering an attractive mix of shopping, dining, and entertainment options that continue to draw shoppers and investors alike.

Retail Supply in 2024 and Expected Growth in 2025

In terms of retail supply, the retail real estate sector saw an additional 1.2 million square feet of space in 2024, setting the stage for even higher growth in 2025. As demand for premium retail spaces continues to rise, more investment-grade assets are expected to enter the market, especially in tier-I cities. The demand for Grade A mall space is forecasted to reach between five to six million square feet in key cities such as Delhi-NCR, Bengaluru, Hyderabad, and Mumbai in 2025.

Evolution of Retail Spaces in India

The landscape of retail spaces in India is evolving rapidly. Retail spaces are now being reimagined as destinations that offer not just shopping but also dining, entertainment, and experiential activities. Brands are embracing innovative approaches to engage consumers, creating immersive experiences and lifestyle-oriented spaces that blend the online and offline worlds. This shift reflects the changing nature of consumer behavior, with shoppers increasingly seeking an integrated experience that goes beyond the transactional.

Global Brands and India’s Retail Appeal

The entry of global brands into India’s retail market further boosts the sector’s growth prospects. Notable entrants include Carrefour, AMIRI, Foot Locker, and luxury retailers such as Maison Margiela, all of which underscore India’s growing appeal as a key retail market for international brands. These brands are tapping into India's burgeoning middle class and affluent consumer base, who are increasingly looking for premium and international retail experiences.

Moreover, India's role as a key market for foreign retailers is becoming even more pronounced as the country continues to attract investments from both international and domestic players. With the government’s initiatives to boost retail sector growth, India remains one of the most attractive destinations for global brands, with new store openings and partnerships expected to rise in the coming years.

Outlook for 2025

Looking forward to 2025, India’s retail leasing market is set to continue its upward trajectory. The robust leasing pipeline, coupled with sustained demand from sectors like fashion, athleisure, and jewelry, suggests a promising future for retail real estate. The ongoing transformation of retail spaces into multi-purpose destinations will further contribute to the growth of the sector.

The entry of more international brands, along with domestic brands adopting innovative retail strategies, is expected to continue reshaping India's retail landscape, making it one of the most dynamic retail markets in the world.

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