The retail landscape in India is undergoing a significant shift with the emergence of ‘ghost shopping malls,’ characterized by low footfall and high vacancy rates. According to recent findings by Knight Frank India, these underperforming malls, encompassing approximately 13.3 million square feet of retail space, have become a notable concern across major cities.
Despite the proliferation of Grade A malls, there has been a remarkable surge in low-performing shopping centers, registering a 59% year-on-year increase. Termed as ‘ghost shopping centers,’ these malls typically exhibit a vacancy rate exceeding 40%. The decline in footfall can be attributed to various factors, including the growing preference for online shopping, uninspiring mall designs, and ineffective management practices. Additionally, intense competition from Grade A malls has further compounded the challenges faced by Grade C establishments.
In response to these challenges, mall owners are exploring alternative avenues to monetize these assets. The Knight Frank survey reveals that several underperforming malls have been repurposed for residential or commercial projects, including co-working spaces, or have been permanently closed or auctioned off. Delhi-NCR emerges as the epicenter of ghost shopping malls, with the highest concentration of abandoned centers, followed by Bengaluru, Mumbai, and Kolkata. However, notable decreases in abandoned malls have been observed in cities like Hyderabad.
While repurposing presents lucrative opportunities, it also comes with its set of challenges. Regulatory hurdles, such as zoning restrictions and permit conversions, pose significant obstacles. Moreover, structural considerations and financial constraints add complexity to the repurposing process. Despite the prevailing challenges, the real estate sector remains optimistic about the potential of repurposing initiatives. Market demand for alternative uses, coupled with strategic renovations and investments, holds the key to unlocking the latent potential of ghost shopping malls.
