The count of ghost shopping malls, characterized by a vacancy rate exceeding 40%, rose from 57 in 2022 to 64 in the previous year across eight major cities. This transformation is driven by changing consumer behavior, with more people opting for online shopping and larger shopping centers for a better shopping experience
Knight Frank India’s latest report, ‘Think India Think Retail 2024’, indicates a significant increase in the number of such malls, which are defined by a vacancy rate exceeding 40%. According to the report, the number of ghost shopping malls rose from 57 in 2022 to 64 in 2023, reflecting a concerning trend in the retail sector.
The report highlights a 238% year-on-year increase in the Gross Leasable Area (GLA) of all shopping centers in prime Indian markets in 2023, alongside an increase in the number of ghost malls from 57 to 64
The report reveals that 64 shopping malls, totaling approximately 13.3 million square feet of gross leasable area, were categorized as ‘Ghost Shopping Centers’ in 2023. This marks a 58% increase in area compared to the preceding year. The National Capital Region (NCR) accounted for the highest stock of ghost shopping centers, followed by Mumbai and Bengaluru. Hyderabad, however, recorded a decline of 19% in the ghost shopping center stock. Mall properties with a vacancy rate of more than 40% are termed ghost malls. According to Knight Frank India, the number of ghost malls in India increased from 57 in 2022 to 64 in 2023. This rise reflects the challenges faced by small malls in attracting tenants and maintaining footfall amidst changing
Knight Frank estimates the loss of value due to the rise in ghost shopping centers to be around Rs 6,700 crore or USD 798 million in 2023. This indicates a significant financial impact on the retail sector, highlighting the challenges faced by landlords and developers in managing underperforming properties.
Expert Opinion:
Shishir Baijal, Chairman & Managing Director of Knight Frank India, emphasized the importance of an enhanced retail experience for shoppers. He stated, “Grade A malls have notably excelled, maintaining robust occupancy, foot traffic, and conversion rates, thereby delivering value to their customers.” Baijal also noted that Grade C assets and ghost shopping centers are lagging, prompting landlords to take action to rejuvenate or divest such properties.
Reduction in Total Number of Shopping Centers:
Despite the addition of 8 new retail centers, the total number of shopping centers in Tier I cities reduced to 263 in 2023, with 16 shopping centers being shut down. Underperforming shopping centers were either demolished or permanently closed due to various reasons such as developers undertaking residential or commercial developments.
Knight Frank’s report provides valuable insights into the challenges faced by the retail sector in India, particularly regarding the rise in ghost shopping malls. The report underscores the need for landlords and developers to adapt to changing consumer preferences and market dynamics to ensure the viability of retail spaces in the future.
