Ghost shopping malls are on the rise, most vacant spaces in Delhi-NCR: Report

The number of ghost shopping malls, which has more than 40 per cent of their retail space vacant, has significantly gone up by 59 per cent to 13.3 million square feet (msf) in 2023 compared to the year before, said a report on Tuesday. This is mainly due to the change in consumer behavior, with more shoppers going for online shopping and larger shopping centers for a better shopping experience.

Real estate consultancy Knight Frank's latest report, "Think India Think Retail 2024", analysed 340 shopping centres and 58 high streets in 29 Indian cities. There were 64 ghost shopping centres in 2023, up from 57 in 2022. The increase led to a value loss of Rs 6,700 crore, the report said.

It further said there is a 238% year-on-year increase in the Gross Leasable Area (GLA) of all shopping centers in prime Indian markets in 2023.

"As nearly $798 million (Rs 6,700 crore) is trapped in the gross leasable space of these non-performing shopping centres, consolidation of retail asset portfolios by institutional investors…proactive steps by mall developers to either repurpose or demolish these structures will provide new opportunities for interested players for land monetisation," said the report.

Delhi NCR leads the list

As per the report, a total gross leasable area of 13.3 million square was categorised as 'Ghost Shopping Centers' in 2023. This marks a 59% increase in area compared to 2022. The Delhi-National Capital Region (NCR) region topped the list with the highest number of ghost shopping centers, followed by Mumbai and Bengaluru. Hyderabad recorded a decline of 19% in the ghost shopping centres.

The sharpest rise was in Kolkata, which recorded a 237 per cent increase to 1.1 msf, but from a low base of 0.3 msf in 2022.
However, the report said overall shopping centre vacancy in eight major Indian cities improved to 15.7 per cent in 2023 from 16.6 per cent in 2022, indicating rising demand in the retail segment.

Excluding ghost shopping centres, the vacancy rate in the segment improved to 7.4 per cent.

"It is prudent to exclude such assets, as this stock does not attract widespread retailer interest due to various constraints, including poor location, obsolete design, strata-sold arrangements, and the dilapidation and unattractiveness of the structures," said the report.

Shopping centres in 29 Indian cities have the potential to generate $14 billion in revenue in the Financial Year 2024-25.

GHOST SHOPPING CENTRES CROSS TIER 1 MARKETS 
City    2022 (mnsq ft)    2023 (mnsq ft)    % Change YoY
NCR    3.4                     5.3                     58%
Mumbai    1.1                2.1                   86%
Bengaluru    1.4            2                      46%
Ahmedabad    0.4    1.1    191%
Kolkata    0.3    1.1    237%
Hyderabad    1.1    0.9    -19%
Chennai    0.3    0.4    35%
Pune    0.4    0.4    11%
Total     8.4    13.3    59%

Source: Knight Frank
 

"The momentum of consumption, propelled by rising disposable incomes, a youthful demographic, and urbanization, tilts in favour of the organized retail sector. An enhanced retail experience remains crucial for shoppers, highlighting the significance of physical retail spaces. Grade A malls have notably excelled, maintaining robust occupancy, foot traffic, and conversion rates, thereby delivering value to their customers. Conversely, Grade C assets and those classified as Ghost Shopping Centres are lagging, prompting landlords to take action to rejuvenate or divest such properties," said Shishir Baijal, Chairman & Managing Director, Knight Frank India