Rising Demand for Organised Retail Space to Attract $3.5 Billion Investments Over The Next 3 Years

Delhi NCR remains at the forefront of India's organised retail expansion, propelled by robust leasing activity.

Published By Construction Perts, The Realty Today, & Finance Outlook India

New Delhi: India's organised retail sector is set to witness strong growth in the coming years, driven by a rare combination of supply shortage and rising consumption. Experts estimate that around $3.5 billion will be invested in retail real estate over the next three years, highlighting the sector's long-term potential.

Despite rapid urbanisation, India's retail infrastructure remains limited compared to global standards. In Tier-I cities, the per capita retail space is just 4 - 6 sq ft per person, while in Tier-II and Tier-III cities it is even lower, averaging 2 - 3 sq ft per person. In comparison, the United States has nearly 23 sq ft per person in Grade-A malls, showing a significant supply gap. This gap is attracting both domestic and international investors who see long-term opportunities in organised retail.

The rising demand for retail space is closely linked to India's growing consumption economy. By 2030, India is expected to become a $6 trillion consumption market, fueled by rising incomes, a young population, and increasing urbanisation. Retail leasing activity reflects this growth trend. In Q3 2025 alone, approximately 3.2 million sq ft of retail space was leased, marking a 65% year-on-year increase. Cities like Delhi NCR and Hyderabad are leading this expansion.

Delhi NCR Anchors Organised Retail Growth

The Delhi NCR region continues to be the primary engine of India's organised retail expansion. Strong leasing activity, rising affluence, and a growing preference for lifestyle-oriented shopping have made the region attractive for retail developers. Many new retail projects in Delhi NCR are now being designed as lifestyle destinations, combining shopping, entertainment, and dining, rather than just traditional shopping malls.

The region’s retail growth is closely tied to its residential development. Areas like Gurugram, Noida, Greater Noida, and Faridabad are seeing rapid urbanisation, creating dense neighbourhoods ready for organised retail. These urban corridors are increasing demand beyond traditional shopping hubs, attracting both domestic and international capital.

Institutional Capital Sees Retail as Stable Asset

The expected $3.5 billion investment in retail reflects a shift in global capital toward markets that provide both growth and stability. Unlike mature Western markets, where many malls are facing closures, India offers strong occupancy levels, increasing rents, and a persistent shortage of quality retail assets.

Investors are increasingly participating through REITs and professionally managed retail platforms. These structures provide transparent governance, predictable rental income, and long-term value creation, positioning organised retail as a stable and growth-oriented investment.

Bhupindra Singh, COO of RISE Infraventures, said,

Experience-driven retail integrated with offices, residences, and hospitality creates captive audiences and all-day footfalls. These formats are preferred by investors seeking long-term, stable income rather than short-term gains.

Growth Beyond Metro Cities

While metro cities currently dominate organised retail, Tier-II and emerging cities are expected to play a major role in the next phase of growth. These markets are gradually maturing, offering opportunities to create integrated, experience-driven retail ecosystems. Developers are focusing on combining retail with entertainment, food, and lifestyle services to attract more visitors and extend shopping hours.

This approach not only improves footfall but also helps in building sustainable income streams for investors. As these cities evolve, they are likely to become key anchors for India’s retail real estate investment over the next decade.

Strong Leasing Activity and Investor Confidence

Retail leasing remains robust across India. The surge in leasing activity, particularly in Delhi NCR, Hyderabad, and other major cities, indicates that demand for organised retail is rising faster than the supply. Investors are increasingly focusing on premium retail assets, such as malls and mixed-use projects, that offer higher returns and long-term growth potential.

Analysts note that the growth story is supported by India’s demographic advantages, including a large young population with higher disposable incomes and evolving lifestyle preferences. Retailers are keen to expand their presence in Tier-II and Tier-III cities, further boosting demand for quality organised retail space.

The coming years are expected to see a significant influx of institutional capital into organised retail, as investors seek assets that combine stable income and capital appreciation. With a persistent supply gap, rising consumption, and growing urbanisation, India's retail sector is among the most attractive investment destinations globally.

Q1. How much investment is expected in India's organised retail sector?

Around $3.5 billion is expected to flow into retail real estate over the next three years.

Q2. Why is India's retail space per person low?

Despite urbanisation, India has limited Grade - A retail and mall space. Tier-I cities offer only 4 - 6 sq ft per person, while Tier-II and III cities are even lower.

Q3. Which cities are leading in organised retail growth?

Delhi NCR is the primary growth hub, followed by cities like Hyderabad, Bengaluru, and Mumbai.

Q4. Why are investors attracted to Indian retail?

High occupancy rates, rising rental income, and limited quality retail space make India attractive. Investors prefer long-term, stable returns over short-term gains.

Q5. What is the future of organised retail in India?

Retail is moving toward experience - focused hubs and integrated consumption ecosystems. Tier-II and emerging cities will become key drivers of future growth.