India’s Rapid Retail Real Estate Expansion: Investment, Consumption, and Consumer Trends

Across many mature markets, retail real estate has spent the last decade fighting headwinds: e-commerce substitution, weak discretionary demand, high interest rates, and (in some cities) too much legacy supply. India is playing a different game. Leasing is rising, vacancies in quality spaces are tightening, and both domestic and global brands are expanding aggressively—often with an “omnichannel first” mindset that treats physical stores as growth engines rather than cost centers.

Below is a grounded look at what’s driving India’s retail real estate upswing—and why it’s bucking global trends.

The headline: demand is outrunning quality supply

India’s retail real estate story in 2024–2025 is defined by a simple dynamic: more brands want high-quality space than the market can deliver quickly.

Leasing momentum: In Q3 2025, India’s top 7 cities recorded 3.2 million sq. ft. of gross leasing, a 65% YoY increase, per JLL’s market update.
Tight supply cycles: JLL notes that 2024 new mall supply fell sharply (down 73% vs 2023) due to long project pipelines, while Q1 2025 saw ~2 million sq. ft. of new mall openings as supply began to come back.
Vacancies compressing: Cushman & Wakefield highlighted 2.24 million sq. ft. leasing in Q2 2025 with vacancies dropping further amid limited new supply.

This is the opposite of the “too much space chasing too few shoppers” pattern that hurt parts of the US and some other developed markets.

Why India is diverging from global retail real estate trends

1) Consumption is growing—and broadening beyond metros

Retail space ultimately follows consumption. India’s macro picture has remained supportive:

India’s Private Final Consumption Expenditure (PFCE) at constant prices was estimated to grow ~7.3% in FY25, supported by a rebound in rural demand, per the Government of India’s Economic Survey summary.
Broader economic commentary also points to consumption resilience and improving retail activity through parts of 2025.

What it means for retail real estate: when discretionary demand expands (and not just in a single premium tier), retailers have more confidence to add stores, enter new micro-markets, and experiment with new formats.

2) Organized retail still has room to expand

In many mature markets, “modern retail” is saturated. In India, organized retail penetration is still rising, and new-to-market global brands continue to enter—creating incremental demand for Grade-A malls and strong high streets.

An Anarock projection reported that Indian malls could attract ~$3.5B in investment over the next three years, partly attributed to the entry of ~90 global brands since 2021, which increases demand for quality retail destinations.

3) Omnichannel isn’t killing stores—it’s making them more strategic

India’s e-commerce is growing fast, but physical retail is not “losing”; it’s adapting. Brands are using stores for discovery, trust-building, returns/service, and faster local fulfillment.

A Brickwork Ratings note projects India’s e-commerce market to grow strongly through 2026 (illustrating why omnichannel is a necessity, not a choice).
Research and industry commentary emphasize omnichannel’s rising importance in India’s evolving digital commerce ecosystem (payments rails, trust, heterogeneity of consumers).

4) Digital-first (D2C) brands are now major offline demand drivers

A big “plot twist” is that many of the brands born online are now among the most aggressive offline expanders.

Economic Times reported that D2C brands’ share of total retail leasing more than doubled from ~8% to ~18% between H1 2024 and H1 2025—signaling a decisive shift to offline expansion as a growth lever.

Why this matters for landlords: D2C brands often prefer prominent, experience-led spaces in malls and high streets—helping upgrade tenant mix and footfall quality.

5) Category mix favors “experience + aspiration”

India’s leasing growth is not only about basic necessity retail. It’s also propelled by categories that drive repeat visits and higher dwell time:

JLL noted shifts in category shares in H1/Q2 2025, including strong traction in segments like jewellery and category rotation versus entertainment in certain quarters.
In Delhi NCR, Cushman & Wakefield’s marketbeat highlights F&B leading leasing (40% share in Q3 2025)—a sign of experiential demand supporting destinations.

Investment: why capital is flowing into retail real estate again

Retail assets in India are attracting interest for a few reasons:

Visible cashflow potential: When vacancies tighten and leasing volumes rise, prime assets can show durable rental growth potential.
Flight to quality: New “investment-grade” mall deliveries (where they exist) can capture outsized demand quickly. CBRE’s H1 2025 figures note supply additions tied to a handful of large malls, with expectations of further momentum in H2 2025.
Global capital looking for growth markets: Even outside pure retail, global developers and funds continue to frame India’s real estate as a multi-year growth story—supporting broader confidence in commercial assets.

The consumer trends landlords and retailers are designing for

1) Convenience + proximity: High streets remain powerful because shoppers want quick access. JLL’s Q3 2025 update reflects a near-even split between high streets and malls, suggesting multiple retail formats are winning simultaneously.

2) Experience-led destinations: Malls are increasingly curated around food, entertainment, wellness, and community events—driving longer visits and cross-shopping.

3) Premiumization alongside value: India is seeing both aspiration spending (premium brands, jewellery, destination dining) and volume growth (FMCG, staples, mass fashion). Reports on shifting consumption baskets also point toward higher spend in categories like durables in FY25.

4) “Trust retail” categories: Beauty, wellness, eyewear, baby care, and specialty foods often benefit from physical touch/try/consult—supporting store growth even when digital adoption rises.

So what’s the big reason India is “bucking” the world?

India is in an expansion phase where:

consumption is still rising,
organized retail is still scaling,
brands (including digital natives) are still adding stores,
and Grade-A supply takes time—keeping good spaces scarce.

That combination produces a landlord-friendly cycle (higher occupancy, healthier leasing pipelines), even while some mature markets are still digesting old oversupply and weaker discretionary demand.

Risks and watch-outs (what could slow the story)

No boom is linear. Key variables to watch:

Overbuilding risk in specific micro-markets if supply ramps too fast relative to catchment incomes.
Interest rate/credit conditions affecting developer funding and cap rates.
Polarization: top malls/high streets winning disproportionately while secondary assets struggle to keep tenant quality.
Execution risk: tenant-mix curation, parking/access, last-mile connectivity, and event programming increasingly determine which assets outperform.

What this means for investors, developers, and retailers

For investors: focus diligence on catchment quality, repeat footfall drivers (F&B/experience), tenant sales productivity, and lease structures—not just headline occupancy.

For developers: the market is rewarding on-time delivery of genuinely “Grade-A” product—good layouts, parking, servicing, and flexible unit sizes for rotating formats.

For retailers: winning expansion strategies in India increasingly look omnichannel by default—stores as acquisition + experience + service nodes, not just transactional boxes.

India’s Rapid Retail Real Estate Expansion: Investment, Consumption, and Consumer Trends.