India’s organised retail real estate market recorded its strongest year on record in 2025, with leasing activity reaching unprecedented levels across major cities, signalling renewed confidence in physical retail even amid global economic uncertainty. The surge highlights how India’s urban consumption engine continues to deepen, supported by rising discretionary spending, experiential retail formats and improving commercial infrastructure.
Industry data shows that retail leasing crossed 8.5 million square feet during the year, while fresh mall completions and high-street developments accelerated sharply. The pace of new supply reflected a decisive shift by developers toward modern, compliance-ready retail assets after years of cautious expansion. Southern markets, led by Hyderabad, emerged as the primary drivers of this new supply cycle, underlining the city’s growing role as a consumption and lifestyle hub beyond its traditional technology base. Urban economists note that retail absorption remained particularly strong in the second half of the year, when multiple large-format centres became operational and retailers scaled up footprints ahead of festive and year-end demand. This momentum was not limited to traditional metro strongholds alone. Cities such as Chennai and parts of the National Capital Region also recorded healthy leasing, pointing to a broader geographic spread of organised retail. Fashion and apparel continued to anchor leasing demand, accounting for nearly half of all space absorbed. However, the category itself is evolving. Retailers are increasingly blending sustainable materials, fast-refresh store formats and omni-channel fulfilment into physical outlets, signalling that brick-and-mortar spaces are now being designed as brand experience centres rather than pure points of sale.
Food and beverage emerged as the second major demand driver, with operators favouring larger, destination-oriented formats in premium malls and prominent high streets. Analysts say this reflects changing urban lifestyles, where socialising, dining and leisure are increasingly intertwined with shopping. Jewellery brands also expanded steadily, with newer formats diversifying beyond traditional gold-led offerings. A notable trend reshaping India’s retail landscape is the growing participation of digital-first brands. Direct-to-consumer players are investing in physical stores to improve customer acquisition efficiency, reduce logistics costs and build trust through tactile engagement. This reinforces the idea that digital and physical retail are no longer competing channels, but complementary layers within the same ecosystem. From an urban development perspective, the resurgence of retail leasing has implications beyond commercial metrics. Well-planned retail hubs contribute to walkability, employment generation and mixed-use neighbourhoods when integrated with public transport and residential clusters. However, planners caution that rapid expansion must be aligned with climate-sensitive design, energy efficiency standards and crowd management to avoid adding stress to city infrastructure.
As India’s cities continue to grow, the performance of retail real estate in 2025 underscores a structural shift: consumption-led urban growth is becoming more decentralised, experience-driven and closely linked to how people live, work and socialise in modern Indian cities.
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