With dismal footfalls, small shopping centres fast becoming ghost malls
The number of ghost shopping malls rose to 64 in 2023 from 57 in 2022, while the number of malls in tier-1 cities shrank 3 per cent as a few of the properties are being demolished to make way for residences.
In terms of area, malls with poor occupancies and footfalls occupied 13.3 million square feet (msf) last year compared with 8.4 msf in 2022, translating into a sunk cost of $799 million, up from $524 million a year ago, according to a Knight Frank India report on the retail landscape titled ‘Think India Think Retail 2024.’
If the land costs are also included, this figure would rise to around $2.5 billion, said Vivek Rathi, National Director, Research. The Knight Frank report has estimated that 132 malls, categorised as Grade C, with a high vacancy of 36.2 per cent, run the risk of transforming into ghost malls soon. Though malls outstrip high streets in terms of numbers and stores in them are double in size, high-street revenues per square foot are 238 per cent higher at $370.
The Knight Frank India report, which encompasses both shopping centres or malls and high streets, is based on a survey
Factors behind the poor patronage of some malls include poor design, bad management and unattractive frontage
of 340 malls and 58 high streets across 29 cities. Empty to sparsely occupied malls are common across the country, even in tier-1 cities such as Mumbai, Delhi and Bengaluru.
LIMITING FACTORS
The reasons for consumers shunning some malls are many, including poor design, bad mall management, unattractive frontage, the intensity of competition, not enough retailers or a poor mix of tenants and the development of high-grade malls in the vicinity.
A major factor is the size of the malls. Most of the malls that fall in this category are under 1 lakh square feet and are not able to oer consumers a complete shopping experience. they also have limited parking space. Being strata-owned, the upkeep of the premises is also left to individual shop or floor owners. Such malls also do not have an anchor tenant. Despite growing consumerism and the mall culture spreading to tier-2 and 3 cities, the report pointed out that the disparity between wellperforming malls and those with high vacancy comprising Grade C and ghost stock, has emerged even more starkly in 2023 compared with 2022.
A move is being made to repurpose the malls, either as coworking spaces, food plazas or parks. They are also being demolished outright to develop other buildings. Top-grade malls numbering 208 accounts for 78 per cent of the total occupying over 9 msf.
Though there are fewer high streets compared with malls in the top eight cities, around 30 per cent of all retail stores are on high streets.
Malls have a higher revenue potential at $14 billion in FY25 than $3 billion from high streets. The National Capital Region has the highest concentration of high street stores with Khan Market in Delhi being the most expensive. Bengaluru and Hyderabad are second and third on the high street list. Malls are heavily concentrated in tier-1 cities, though other cities are also catching up such as Lucknow with a share of over 18 per cent followed by Kochi and Jaipur.