Bengaluru, Hyderabad and Chennai Lead Strong Grade A Mall Leasing Despite Limited New Supply in H1 2026

India’s premium retail real estate market continued to demonstrate remarkable resilience during the first half of 2026, with demand for Grade A shopping mall space far exceeding the availability of new developments. According to Anarock Research, gross leasing across India’s top seven cities reached 41 lakh square feet during H1 2026, while developers delivered only 9 lakh square feet of new Grade A mall space.

The widening gap between leasing demand and fresh supply reflects the growing appetite among retailers for premium retail destinations. Bengaluru, Hyderabad, Chennai and Pune recorded healthy leasing activity during the period despite the absence of any new Grade A mall completions. Delhi-NCR was the only market to add fresh Grade A retail space, delivering 9 lakh square feet while recording leasing of 12.6 lakh square feet.

Industry experts believe the shortage of quality retail assets has become one of the biggest challenges for retailers planning expansion. Anuj Kejriwal, CEO – Retail and CEO – Europe, Middle East and Africa at Anarock Group, said retailers are finding it increasingly difficult to secure suitable Grade A retail space, even as consumer demand continues to remain strong.

The supply-demand imbalance has been building over the last few years. In 2025, India added 52 lakh square feet of new Grade A mall supply, while leasing surged to a record 1.3 crore square feet. During H1 2026, geopolitical uncertainties and project delays further slowed new mall completions, widening the gap despite a moderation in leasing activity.

The report also highlighted improving occupancy across premium retail assets. Vacancy levels in Grade A malls declined to 6.7 percent during H1 2026, the lowest level recorded since 2010. Meanwhile, older Grade B and Grade C malls continued to report significantly higher vacancy levels, ranging between 8 percent and 35 percent.

Limited availability of large land parcels, rising land prices, lengthy approval processes and higher development costs continue to delay new retail projects across major metropolitan markets. As organised retail brands continue their expansion plans, developers are expected to accelerate Grade A mall construction in high-growth cities, particularly across South India, where demand remains consistently strong and quality retail space remains limited.