Indian audience have been a party to enormous real estate growth in last 2 decades. The economy celebrated the 33 years of liberalization that opened a new gate for Indian audience. Apart from professional growth, the country witnessed something that can only be explained by the social infrastructure. The idea of “standard of living” has a massive change of definition – a concept that was a luxury a decade back is now a mere hygiene to define lifestyle.

The most impacted regions would be the tier 1 metro cities. The top, most developed cities encompass Mumbai, Delhi-NCR, Chennai, Hyderabad, Bengaluru, Pune, and Kolkata. This surge and infinite influx of the retail sector has sparked a natural demand for residential units across the cities.

• In the Q1 2025 alone, i.e. between January to March, 3.1 million sq. ft. is leased out to India’s retail sector. This is a significant demonstration of an impressive performance by the retail sector in terms of both demand and supply. The demand, inevitably, has seen a spike and is positively met by the supply end with. In Q1 2025, 2 million sq. ft. retail spaces were infused.

These figures, in comparison to the same time span in 2024, retail leasing witnessed a remarkable Y-o-Y growth of 169%, majorly driven by metropolitan cities.

• Geographical Bifurcation: Bengaluru and Hyderabad, together, have contributed 60% of this impeccable retail movement. The other 5 cities, namely Mumbai, Pune, Kolkata, Chennai, and Delhi-NCR have seen lesser but remarkable growth as well. 5 new malls, spread across 2 million sq. ft. of space became functional. This episode is led by Mumbai with 68% new retail space. This is followed by 1 Grade A malls, each in Hyderabad and Delhi-NCR.

*Figure 1.
Industry Bifurcation: The dominating industry in this year’s leasing journey is Fashion & Apparel with 31% share. This is followed by Food & Beverage with 21% share and then Entertainment with 16% share.

*Figure 2.

The rise in the retail sector with dominance of the above industries is a result of two-fold growth –

**The rampant growth of “home-grown” brands venturing into these lines of businesses. The entrepreneurial streak clubbed with unparallel government support and initiatives results in such scenario where the market is filled with new potentials.

**The foreign relations and the growing status of our economy are encouraging international brands to set up their businesses in our country. Foreign entities are finding promising potential in our country; this leads to a competitive set of production and retail in our cities and opening the doors for universal brands for our consumers.

Prominent high streets across these cities witnessed vibrant leasing in suburban micro-markets with larger store size requirements coming from retailer categories such as daily needs and grocery, food and beverages and fashion and apparel.

• Regional Bifurcation:

*Figure 3.

Remarkably different from our past, the maximum absorption of retail space is by domestic retailers with 86% share in total space. This is a great sign of futuristic growth and faith that our Indian brands are showing in our economy. The remaining 14% is consumed by international retailers.

• How does it impact Residential Market?

The growth of residential markets, in any city, is a result of a hospitable location for the residents. Considering the developing job market scenario, we see the emergence of the metro cities being the top-most preference for homebuyers and migrants. Any potential homebuyers see three things – Commuting, Social, and Civic Infrastructure. The impact of the retail sector boom is directly impactful on our housing market:

• The larger share of domestic retail glorifies the improved scope of growth that positively impacts the purchasing power. The social and civic infrastructure are 2 out of the 3 pillars of a growing housing market.
• With retail space growing massively reflects the accommodative nature of cities to reward their goers with comfort and convenience.
• The amalgamation, as seen in figure 1 shows how well the cities are focusing on their infrastructural development. For a comfortable lifestyle, the requirements of medical, educational, and entertainment are of immense importance. Any prospective buyer’s checklist has these 3 elements as the first three decision-making factors
• Builders are increasingly using these developmental benchmarks as selling points for their upcoming projects. At random, any lifestyle project optimizes the presence of structural infrastructure, in the face of retail establishments as well.

The support of such retail establishments creates a hospitable ecosystem for buyers. It has been evident that the presence of retails spaces gives the buyers confidence in growth and stability of real estate asset class.

Another important role that retail sector plays in Indian Real Estate market is the ROI boost it provides for its neighboring residential apartments for sale.

• ROI in terms of both rental and resale values is triggered by stable infrastructure encompassing the project. Developers are increasingly inclining towards holistic development including retail spaces within the project. For instance, Oberoi developers, in Mumbai develop large retail spaces or malls with their projects like Oberoi Sky City, Mumbai Suburbs.
• This increases the scope of better price establishment of project, wider scope for potential investors and preferred interest of tenants.

The scope of collaboration between retail and residential sectors is manifold. It cannot be limited to a certain figure for this quarter. The reports suggest that the future of retail sector in India in the coming 3 quarters is remarkable. Grade A supply of retail shopping malls, in the ongoing pace, is expected to reach 7 million sq. ft. by the end of 2025. With this momentum, the growth of retail and residential is predicted to be healthy and in an expansion mode with an abundant supply of quality spaces in key micro-markets in the top 7 cities.

*Data and excerpts taken from REIS, JLL Research