India is set to get over 65 million sqft of new mall spaces by the end of 2022, according to a new report from real estate services firm ANAROCK.

The report shows top 7 cities will account for 72% of the new mall space, while tier 2 and tier 3 cities will see 28% or 18.2 million sqft of new supply.

“Of the 65 million sq.ft. of new mall supply hitting the Indian market by 2022-end, nearly two-thirds (40 million sq.ft.) will deploy by 2020-end itself – and not just in the metros. This new supply is also driven by the increasing interest of institutional investors – including PE players – who invested almost US$ 1.9 billion into Indian retail between 2015 and Q1 2019. In fact, over 60 percent of this investment corpus was infused in the last two years (2017 and 2018) alone, making these the best years for the retail sector in recent times. Notwithstanding the decline in deal activity in the second half of 2018 following the NBFC-induced liquidity crisis, the retail segment attracted investments of almost US$ 115 million in just the first quarter of 2019,” Anuj Kejriwal, MD & CEO, ANAROCK Retail was quoted as saying in a report.

The report also maintains that REITs can be a viable tool for mall developers to raise funds, but this fund-raising instrument still needs to mature sufficiently. Also, the retail REIT structure and performance may not be directly comparable with the commercial office sector.

The Indian retail industry has moved from long-term leasing to short-term leasing tenures (3-5 years) to enable constant updating of the brand mix within the mall. Globally, the standard lease term is still above 5 years, claims the report.