India's retail real estate leasing hits four-year high amid supply constraints

India's organised retail real estate market remained resilient in the first half of 2026, as sustained consumer demand and retailer expansion kept leasing activity strong despite limited new supply.

Robust occupier demand, coupled with a growing preference for organised retail destinations, continued to support leasing activity even as developers struggled to add quality shopping mall space.

Gross leasing across India's top seven cities rose 10.5% on-year to 6.27 million sq. ft. during the period, marking the highest half-yearly leasing volume recorded in the past four years, showed JLL India data. However, new shopping mall supply declined 64% on-year to 0.82 million sq. ft., indicating the widening demand-supply gap in organised retail.


“India's retail real estate sector is in the resilient growth phase, where demand is surging to record levels, reinforcing the sector’s position as a key driver in the economy. With the country’s total shopping mall stock now standing at 92 million sq ft and consumer expectations rapidly evolving, developers and occupiers prioritizing quality over quantity and investing in next-generation assets that seamlessly integrate technology, convenience, and immersive, experience-led retail formats,” said Saket Amrit, Head - Retail Services, India, JLL.

Leasing momentum strengthened during the second quarter, with gross leasing rising 2.7% sequentially to 3.18 million sq. ft. from 3.09 million sq. ft. in the first quarter as retailers continued to expand across shopping malls, high streets and prime retail developments. Domestic retailers remained the key growth driver, accounting for 79.1% of the total gross leasing.

“Retailers today are looking beyond traditional store expansion and are prioritising destinations that offer stronger consumer engagement and higher trading potential. This is encouraging developers to invest in larger mixed use real estate eco systems , experiential formats and up market retail environments that can sustain long-term footfalls. As new supply over the next few years is planned with focus on creating differentiated assets rather than simply adding retail space,” said Rajneesh Mahajan, CEO, Inorbit Malls (India).

The shortage of quality retail space also tightened occupancies across organised retail assets. Shopping mall vacancy across the top seven cities declined by 45 basis points year-on-year to 11.15% at the end of first half of 2026. Shopping malls continued to gain share in overall leasing, accounting for 43.1% of gross leasing compared with 38.9% in a year ago. Leasing in shopping malls grew 22.4% on-year, reflecting retailers' growing preference for premium and organised retail environments.

Mumbai remained the largest retail leasing market, accounting for 29% of total leasing during the first half of the year, followed by Delhi NCR at 24% and Bengaluru at 23%. Together, the three cities contributed more than 75% of the country's leasing activity. Kolkata emerged as the fastest-growing market, with leasing volumes surging 87.3% year-on-year following the completion of a new shopping mall in the first quarter.

Delhi NCR and Mumbai also recorded strong leasing growth of 75.9% and 69.6%, respectively, while Bengaluru, Hyderabad and Chennai witnessed moderation in leasing activity.

Domestic retailers continued to dominate leasing activity, accounting for 79.1% of total gross leasing. While the pace of entry of new international brands moderated, expansion by established global retailers remained steady, with gross leasing by international brands increasing 62.1% year-on-year.

Despite near-term supply constraints, developers have a sizable pipeline planned over the next few years. Around 45.5 million sq ft of shopping mall space is under various stages of construction across the top seven cities and is expected to become operational by 2030, positioning the organised retail sector for its next phase of long-term growth.