Rise of Ghost Shopping Malls: Challenges and Trends in India’s Retail Sector as Online Shopping Surges; Report

The number of ghost shopping malls is on the rise in India, with Delhi NCR leading the list followed by Mumbai and Bengaluru, according to Knight Frank India’s latest report, ‘Think India Think Retail 2024’. These malls are characterized by a vacancy rate exceeding 40%, reflecting changing consumer behavior and preferences towards online shopping and larger shopping centers.

The report indicates a significant increase in the number of ghost shopping malls, from 57 in 2022 to 64 in 2023, across eight major cities. This rise marks a concerning trend in the retail sector, highlighting challenges faced by small malls in attracting tenants and maintaining footfall.

In 2023, 64 ghost shopping malls totaled approximately 13.3 million square feet of gross leasable area, representing a 58% increase compared to the previous year. The National Capital Region (NCR) had the highest stock of ghost shopping centers, followed by Mumbai and Bengaluru. However, Hyderabad saw a decline of 19% in ghost shopping center stock.

Knight Frank estimates the financial impact of the rise in ghost shopping centers to be around Rs 6,700 crore or USD 798 million in 2023, highlighting challenges for landlords and developers in managing underperforming properties.

Grade A malls have excelled in maintaining robust occupancy and foot traffic, while Grade C assets and ghost shopping centers are lagging behind, prompting landlords to take action to rejuvenate or divest such properties.

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.

Overall, Knight Frank’s report highlights the challenges faced by the retail sector in India, underscoring 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.