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While shopping malls across Western countries grapple with falling footfalls and widespread closures, India is a very unique and opposite case, where physical retail is not just surviving but thriving, according to property consultant ANAROCK.

The US has almost 1,200 malls that have lost store space since 2020; meanwhile, global investors and brands are increasingly turning their attention to India, which will receive USD 3.5 billion for mall projects in the next three years, as per the property consultant.

The broader picture remains grim, even though there has been a 78 per cent increase in new mall store openings in the US during the last two years. The rising number of unsold stores has led to nearly 40 per cent of the US's empty malls being rezoned or repurposed for alternative uses.

On the other hand, India’s mall ecosystem is living robustly due to strong consumption demand, supportive policy frameworks, and a severe shortage of quality retail assets.

From 2021 until the first nine months of 2025, over 88 foreign brands have come to the Indian retail market, and these are only the ones that were counted; many more are already actively doing the same by looking for space in the best-graded malls. However, availability remains constrained.

According to Anuj Kejriwal, CEO–Retail Leasing and Industrial & Logistics at ANAROCK Group, “In the next three years, Indian malls are expected to attract over USD 3.5 billion in capital inflows. With 88+ foreign brands already entering India and many more in the pipeline, demand for Grade-A retail space far exceeds current supply.”

According to ANAROCK, India’s retail expansion is underpinned by a significant demand–supply mismatch. Per capita retail stock remains among the lowest globally:

Tier I cities: 4–6 sq ft per person

Tier II & III cities: 2–3 sq ft per person

Grade-A mall space: barely 0.6 sq ft per capita

By comparison, the US averages nearly 23 sq ft per capita, while China exceeds 6 sq ft.

This shortage has resulted in near-full occupancy across Grade-A malls, with 95–100 per cent leased space and long waiting lists in prime zones. Rental growth has surpassed pre-pandemic levels, and leasing cycles are now outpacing construction timelines—an anomaly in global retail markets.

According to ANAROCK, India’s consumption engine continues to accelerate. The country is on track to become a USD 6 trillion consumption economy by 2030, driven by a young population, rising disposable incomes, and rapid urbanisation.

Western malls rely heavily on traditional retail and thus are less majestic than their Indian counterparts, which have transformed into lifestyle and social hubs. The entertainment and food & beverage sectors now have a share of 30–35 per cent in footfalls, and this is what makes malls robust against online disruption.

The number of people visiting these places on weekdays is often above 20,000, and on weekends in the most urbanised areas it is even more than 40,000.

There are more than 600 malls in India that are currently functioning, but less than 100 are the ones that are considered to be of top quality assets, which forces the competition for the remaining great portfolios to be quite intense.

One of the most significant moments in 2023 was when the Blackstone-backed Nexus Select Trust REIT, which comprised 19 malls with over 1,000 brands and Rs 1,600 crore of annual NOI, was listed.

“This listing validated retail real estate as a transparent, scalable, and professionally managed asset class,” Kejriwal notes. “By 2030, at least two more retail-focused REITs are expected to enter the market.”

Contrary to global fears, e-commerce has not undermined India’s physical retail. With online penetration at just around 8 per cent, compared to over 20 per cent in the US and China, malls continue to play a central role.

Brands are progressively taking on a 'phygital' approach, where they utilise physical outlets to generate trust and offer experiences and take advantage of the internet for their large scale. Several direct-to-consumer companies indicate that the rates of conversion in physical establishments are 2-3 times greater than those of the online ones, which is a strong indicator of the still-existing importance of the retail sector in India.

Indian Grade-A malls offer 14–18 per cent internal rates of return (IRRs)—nearly double the yields seen in many Western markets. Low vacancy levels, rental escalation clauses, and revenue-sharing models linked to consumption growth provide both stability and upside.

“In the US and Europe, malls are battling oversupply, declining footfalls, and the threat of repurposing,” Kejriwal concludes. “India, by contrast, has limited quality supply, rising incomes, strong footfalls, and aggressive brand expansion. In the first half of 2025 alone, retail leasing grew nearly 70 per cent year-on-year, while new mall supply expanded by over 160 per cent.”

As Western malls brace for an existential reckoning, India stands out as one of the world’s most compelling retail investment destinations. With global capital pivoting eastward, India’s Grade-A malls are poised to become the next frontier for institutional investors seeking growth, yield, and long-term resilience.