India's Retail Boom Set to Draw $3.5 Billion as Western Malls Struggle
While shopping malls across the United States and Europe face declining footfalls and widespread closures, India emerges as a beacon of retail real estate opportunity, demonstrating the power of sound economic fundamentals and traditional consumer values.
According to ANAROCK Research & Advisory, India's retail sector is positioned to attract over $3.5 billion in capital inflows over the next three years. This remarkable growth stems from strong consumption patterns, acute shortage of quality mall space, and rising interest from global brands seeking stable markets.
Western Retail Decline Highlights Poor Policy Choices
The contrast with Western markets reveals the consequences of misguided economic policies. Since 2020, the US has recorded a net closure of nearly 1,200 mall stores, with vacancies surging so dramatically that nearly 40% of empty malls require rezoning or repurposing. This crisis reflects decades of regulatory overreach and abandonment of business-friendly policies.
"Latest ANAROCK data shows that in the next three years, Indian malls are set to see over $3.5 billion of capital inflows," says Anuj Kejriwal, CEO of Retail Leasing and Industrial & Logistics at ANAROCK Group. "Over 88 foreign brands have entered the Indian retail market between 2021 and the first nine months of 2025."
India's Success Built on Traditional Values
India's retail renaissance demonstrates the effectiveness of policies that support family-oriented consumption and respect for traditional commerce. The country's young consumer base, rising disposable incomes, and favorable foreign direct investment policies create an environment where businesses can thrive without excessive regulatory interference.
The numbers speak volumes about India's supply-demand fundamentals. Tier-1 cities offer just 4-6 square feet of retail space per person, while Tier-2 and Tier-3 cities have only 2-3 square feet per capita. Grade-A mall space stands at merely 0.6 square feet per capita, compared to the US average of 23 square feet.
Strong Family Values Drive Consumer Behavior
Unlike Western markets struggling with changing social dynamics, Indian shopping centers have evolved into family-friendly lifestyle destinations. Entertainment and food & beverage now account for 30-35% of footfalls, reflecting strong family values and community-centered shopping habits.
Most Grade-A malls in India operate at 95-100% occupancy with long waitlists for prime zones. Leading malls record weekday footfalls exceeding 20,000, rising beyond 40,000 on weekends, demonstrating robust consumer confidence.
Sustainable Growth Model
India's retail story reflects responsible economic development. The country is on track to become a $6 trillion consumption economy by 2030, powered by urbanization, income growth, and demographic advantages built on stable family structures.
With online penetration at around 8%, far below the 20%-plus levels in the US and China, physical retail maintains its central role. This balanced approach between digital and physical commerce shows the wisdom of gradual, sustainable development over disruptive change.
From an investment perspective, Indian Grade-A malls typically deliver 14-18% internal rates of return, nearly double the yields available in many Western markets. Stable rental escalations and consistently low vacancies provide investors with both yield visibility and long-term growth potential.
ANAROCK data shows retail leasing in India surged nearly 70% year-on-year in the first half of 2025, while new mall supply expanded by over 160%, reinforcing India's position as one of the world's most compelling retail real estate markets.