The Specter Of Ghost Malls: Is Online Shopping Haunting Shopping Malls In India?
In the bustling streets of India, a curious phenomenon is taking shape 每 the rise of ghost shopping malls. Once vibrant centres of commerce, these sprawling complexes now stand eerily empty, echoing the footfalls of a bygone era. As online shopping continues its meteoric ascent, traditional brick-and-mortar stores are left to grapple with an existential question: is the digital revolution sounding the death knell for offline shopping centres?
With a staggering 59% year-on-year increase in Ghost Shopping Malls by Gross Leasable Area (GLA) since 2022, India's prime markets are witnessing a profound transformation in their retail landscape. According to a recent report, the number of these spectral centres has risen to 64 by the end of 2023, marking a notable uptick from the 57 observed in 2022.
This surge in Ghost Shopping Malls also known as dead malls or abandoned malls, characterised by a vacancy rate of 40% or more, has significant financial implications. Knight Frank India estimates the loss of value to be a staggering Rs 67 billion (USD 798 million) in 2023 alone. This substantial figure underscores the magnitude of the impact that the rise of online shopping is having on traditional brick-and-mortar retail spaces.
What report say?
The latest report of Knight Frank India, ＆Think India Think Retail 2024＊ shows that in 2023, 64 shopping malls in India were called 'Ghost Shopping Malls' because they had a lot of empty space, totalling around 13.3 million square feet. This is a big increase of 58% compared to the previous year. The National Capital Region (NCR) had the most ghost malls, followed by Mumbai and Bengaluru. But Hyderabad had fewer ghost malls, with a drop of 19%.
Ghost malls are malls with more than 40% of their space empty. According to Knight Frank India, the number of these malls went up from 57 in 2022 to 64 in 2023. This shows that small malls are struggling to get tenants and shoppers, especially as more people shop online. This is a big problem for traditional malls as they try to stay relevant.
This increase in ghost malls is a wake-up call for the retail industry. It's clear that changes need to happen to make malls more appealing to shoppers and businesses. So, it's important for everyone involved in the industry to work together to find solutions and keep offline shopping centres alive and thriving.
In the National Capital Region (NCR), there were the most ghost shopping centres, covering 5.3 million square feet, which is a 58% increase compared to the previous year. Mumbai and Bengaluru also had a significant number, with 2.1 million square feet (up 86% year-on-year) and 2 million square feet (an increase of 46% year-on-year) respectively. However, Hyderabad saw a decrease of 19%, with its ghost shopping centre space shrinking to 0.9 million square feet in 2023. The report looked at data from 340 shopping centres and 58 main streets in 29 Indian cities.
In the previous year, India had a total of 125 million square feet of ghost shopping centre space. The top 8 Indian cities accounted for 75% of this, totaling 94.3 million square feet across 263 shopping centres. In contrast, Tier 2 cities had 30.8 million square feet of ghost shopping centre space.
Impact
The rise of ghost shopping centres is hitting the retail sector hard, with Knight Frank estimating a loss of around Rs 6,700 crore or USD 798 million in 2023. This means big challenges for landlords and developers who are struggling to manage these struggling properties.
As more people turn to online shopping and consumer habits change, traditional malls are feeling the pressure. Landlords and developers are facing financial losses and the tough job of finding ways to make these underperforming properties successful again.
To tackle this problem, it's crucial for everyone involved to come up with new ideas and work together. By embracing digital tools, forming partnerships, and focusing on what customers want, we can overcome these challenges and create a stronger retail landscape for the future.
In 2023, despite the opening of 8 new retail centres, the total number of shopping centres in Tier I cities decreased to 263, with 16 centres shutting down. Reasons for closure varied, from underperformance to developers opting for residential or commercial projects instead.
Knight Frank's report sheds light on the hurdles confronting India's retail sector, especially the surge in ghost shopping malls. It highlights the necessity for landlords and developers to adjust to shifting consumer trends and market conditions to sustain the future viability of retail spaces.
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