Small Indian cities to witness high retail developments by 2029: Report

Smaller cities, led by Tier-II and Tier-III locations, are projected to witness 25 million square feet (msf) of new retail supply by 2029, according to a report by JLL India.

The estimated "expansion is driven by growing consumer demand, availability of land, and a lack of quality retail developments in these markets until a few years ago," said the report.

According to Samantak Das, chief economist and head of research and REIS, India, JLL, North Indian Tier-II and Tier-III cities such as Ludhiana, Jaipur, and Lucknow will account for 44 per cent of the total upcoming supply, while southern India will contribute 30 per cent, with cities like Coimbatore, Mallapuram, Thrissur, and Trivandrum leading the supply. The eastern region will see a supply of 4.5 msf, primarily led by Guwahati.

 

"In western India, major developers are coming up with large-scale, high-quality retail projects in cities such as Goa, Surat, and Ahmedabad," Das added.

Developers are also acquiring land parcels in strategic locations in these emerging cities to construct retail projects, the report said.

"In recent years, leading real estate developers have acquired land parcels in Tier-II and Tier-III cities for retail development projects," said Rahul Arora, head of retail services and office leasing advisory, senior managing director (Karnataka, Kerala), JLL India.

Moreover, 30 per cent of institutionally held retail assets are located across 12 Tier-II and Tier-III Indian cities, as developers and institutional investors capitalise on the "lower land costs and growing aspirations of consumers in smaller cities."

These cities include Amritsar, Chandigarh, Ludhiana, Udaipur, and Mohali in the north; Mysuru and Mangaluru in the south; Ahmedabad, Surat, Indore, and Nagpur in the west; and Bhubaneswar in the east.