02 December 2023, Mumbai
WHY India
India's mall space is set to witness a remarkable growth of 35 million square feet in the next two to three years, fuelled by the retail sector's strong rebound in the previous year. Continuous investments from various sources further bolster this expansion, projected to exceed Rs 20,000 crore over the next four years.
Private equity, global pension funds, and sovereign wealth funds are expected to contribute significantly, accounting for approximately 15% of these investments.
- Tier II cities are poised to be the primary drivers of this growth, with mall space in these regions expected to increase by 25%. Despite substantial capital expenditure plans, mall owners are anticipated to achieve revenue growth of 7-9% in the current fiscal year, maintaining stable credit risk profiles.
- This positive trend is expected to sustain a high occupancy rate of 95%.
- Diversified consumption across various categories is crucial for retailers' long-term success, as emphasized by CRISIL Ratings' Associate Director Saina Kathawala.
- Categories such as jewelry, restaurants, sports, and electronics have witnessed double-digit growth in the current fiscal year, while the apparel and footwear sectors have also demonstrated a robust recovery.
- CRISIL Ratings attributes the stable credit risk profiles this year to solid operating performance and healthy balance sheets.
- The agency expects a marginal improvement in the debt-to-EBITDA ratio, from 3.2 times in the last fiscal year to 3 times in the current fiscal year.
Net net
India's mall market is poised for significant expansion, driven by strong retail sector recovery, continuous investments, and diversified consumption patterns.
This growth is expected to benefit mall owners, retailers, and the overall economy.
5 key insights :
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Retail Sector Rebound Drives Mall Growth
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Continuous Investments Fuel Expansion
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Tier II Cities Lead Mall Boom
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Diversified Consumption Boosts Retailers
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Stable Credit Profiles for Mall Owners
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