India's Retail Real Estate Leasing Reaches Four-Year High Amidst Supply Shortage

The Indian organised retail real estate market demonstrated remarkable resilience in the first half of 2026, recording its highest half-yearly gross leasing in four years. This surge occurred despite a notable contraction in the supply of new shopping mall space, according to JLL India data.

Leasing Momentum and Supply Constraints

Gross leasing across India's top seven cities escalated by 10.5% year-on-year to 6.27 million sq. ft. during H1 2026. This robust demand, driven by sustained consumer spending and retailer expansion, starkly contrasts with a 64% year-on-year decrease in new shopping mall supply, which stood at 0.82 million sq. ft. The widening gap between demand and supply underscores the sector's vibrant growth phase.

Key Market Trends

• Increased Occupancy: The shortage of quality retail space led to a tightening of occupancies, with shopping mall vacancies across the top seven cities declining by 45 basis points year-on-year to 11.15% by the end of H1 2026.
• Dominance of Domestic Retailers: Domestic retailers were the primary catalysts for growth, contributing 79.1% of the total gross leasing activity.
• Shopping Malls Preferred: Shopping malls increased their share in overall leasing, accounting for 43.1% of gross leasing, up from 38.9% in the previous year, indicating a rising preference for organised retail environments.
• Regional Performance: Mumbai emerged as the leading market, capturing 29% of total leasing, followed by Delhi NCR at 24% and Bengaluru at 23%. Kolkata showed the most significant growth, with an 87.3% year-on-year increase in leasing volumes.

Future Outlook

Despite immediate supply constraints, developers have ambitious plans for the future. Approximately 45.5 million sq. ft. of new shopping mall space is currently under construction across the top seven cities and is projected to become operational by 2030. This pipeline is expected to support the organised retail sector's continued long-term growth, with a focus on developing differentiated assets and experiential retail formats.