India’s ghost malls have caused a loss of $524 million: Knight Frank

India’s ghost malls have caused a loss of $524 million: Knight Frank
  • A total of 57 malls across the top eight cities in India lie largely unused.
  • The highest number of ghost malls are in Delhi NCR, Pune and Hyderabad.
  • Apart from the ghost malls, the overall mall health has improved post pandemic with their numbers increasing from 255 in 2018 to 271 currently.
  • Organised retail sale volumes expected to reach $136 billion by FY28.
A total of 57 malls, or 21% malls, across the top eight cities in India are in a dilapidated state and have resulted in a loss of over $524 million, according to Knight Frank India’s latest report ‘Think India, Think Retail 2022’.

If a mall has a vacancy of more than 40%, it’s defined as a ‘ghost mall’. The highest number of ghost malls are in Delhi NCR , followed by Pune and Hyderabad.

Lack of due diligence, mall shortcomings such as size and ownership patterns, design issues, faulty layouts with dark alleys, lack of customer walk flow management, low occupancy and lack of anchor tenants — have all contributed to the creation of these ghost malls.

“All attempts to breathe life into these assets and attract a good retailer mix and footfalls have been unsuccessful. As a result, the revenue generation potential of such malls is far below the expected threshold,” the report said.

In some cases, termination notices have been served to shut down a few large format stores which comprised an entire mall. Discontinuation of operations, demolition of shops inside the mall premises and auctioning of the mall property due to non payment of dues to the local mall authority are also underway, said the Knight Frank report.


The report also has a few suggestions for utilising these ghost malls.

“The vacant spaces of ghost malls can be used for thrift stores, food and clothing banks, exhibition, presentation and event spaces. Daycare, elder care, pet care and even elementary and secondary schools can be opened. Workforce training centres and human development centres for government services can also spring up in ghost malls,” said Shishir Baijal, chairman and MD of Knight Frank India at the unveiling of the report.

Leasing out empty spaces for long-term commercial use to local businesses that cannot afford high rents in prime office business parks or popular business districts can also be done, the report suggested. Demolition of the existing structure and sale of land to minimise the losses was another suggestion that was put forth.

Malls witnessing growth despite rise of e-commerce

The report also stated that excluding the ghost malls, the overall mall health has improved post pandemic. There were 255 malls in 2018 but it has risen to 271 now — adding over 15 million sq feet.

Despite the rise of e-commerce, India’s physical stores still account for 95% of retail business, the report claimed. The retail industry will continue to account for 10% of India's GDP for the next five financial years. The organised retail sales grew at a CAGR of 24% between FY 2017- 22.

The organised retail sector in India, despite taking a hit during the pandemic, is still growing. Post Covid, the recovery in operational metrics of malls has been healthy, with consumption in January-June 2022 growing 20-25% from the same period in FY2020, the report said.

“With this large-scale pent-up demand, shopping centre development has seen a new rigour after being at a standstill for almost 2 years. In the next 12 months, we expect an addition of 8-9 mn sq ft of mall space.This is not just limited to the tier 1 markets. Tier 2 and 3 cities are also ready to support mid to large scale mall developments,” Rajneesh Mahajan, CEO of Inorbit Malls said.

As per Knight Frank Research, organised retail sales volume is estimated to grow at a CAGR of 17%, from $52 billion in FY22 to $136 billion by FY28. New Delhi, Mumbai and Bangalore have the maximum number of malls, with Hyderabad performing the best in maximum occupancy in Grade A or premium malls.

India has a total mall area spread across 92.9 mn sq ft in 271 operational malls in the top eight markets – Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, National Capital Region (NCR) and Pune.

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