While a clear shift toward high-quality organised retail formats is reshaping India’s retail sector, nearly one-fifth of the country’s operational shopping centres fall into the category of ‘ghost malls,’ assets marked by high vacancies, weak tenant curation, ageing infrastructure and declining relevance.
The ‘Think India, Think Retail 2025 – Value Capture: Unlocking Potential’ study by Knight Frank India revealed that across 365 surveyed shopping centres, 74 have been classified as ghost assets, representing 15.5 million square feet (msf) of dormant retail potential. Within this pool, 15 centres with a combined area of 4.8 mn sq ft have been identified as high-potential assets that could deliver as much as Rs 357 crore in annual rental revenues if reinvigorated effectively.
Of the 15 shortlisted assets with clear reinvigoration potential, tier 1 cities hold an opportunity of Rs 236 crore in annual rentals, while tier 2 cities add another Rs 121 crore to the reinvigoration landscape. The study revealed that the ghost mall challenge is not confined to smaller cities or emerging markets.
Tier 1 cities account for 11.9 msf of this dormant stock, indicating that even some of the country’s earliest and most established malls have struggled to keep pace with changing consumer expectations, shifting brand strategies, and the evolution of modern, experience-led retail formats. On the other hand, tier 2 cities contribute the remaining 3.6 msf, where operational inefficiencies, inconsistent management practices, and limited anchor presence have restrained shopping centres from reaching their full potential, the report pointed out.
Dormant Retail Infrastructure
High vacancies, unstable tenant mixes, outdated layouts, and weak or missing anchor tenants are the clearest signals of an underperforming asset. The study highlighted that grade C malls and older developments, particularly in peripheral locations, are most vulnerable to obsolescence unless repositioned as community hubs, co-working spaces, or mixed-use developments.
Tier 1 cities are beginning to see a decline in ghost shopping centres as redevelopment, new ownership models, design upgrades and alternate-use conversions bring ageing assets back to life. With rising flexible workspace demand and evolving retail formats, dormant centres are finding renewed relevance
“Our analysis shows that reinvigorating 4.8 msf of dormant mall stock could unlock Rs 357 cr in annual rentals, which is a substantial opportunity for developers and investors. With grade A malls operating at only 5.7 per cent vacancy and several tier 2 cities demonstrating strong absorption trends, the sector is exceptionally well placed for future expansion,” stated Shishir Baijal, Chairman and Managing Director, Knight Frank India.
The study showed that of the 74 ghost malls identified, 44 per cent lie in the west, aligning with both favourable catchments and revenue potential. The west and south together contribute 77 per cent of the estimated rental opportunity, while the top eight metros account for 66 per cent of the Rs 357 crore annual potential for 2025.
Further, a rental yield of 5.86 per cent makes reinvigoration a compelling investment, the report stated. With improving connectivity and a shift toward experience-led, mixed-use development, revitalising dormant retail assets is set to drive the next wave of growth.
Retail Real Estate And Polarisation
The report pointed out that India’s retail real estate is becoming increasingly polarised. While grade A malls record high occupancy, strong footfalls and robust brand mixes, ageing and poorly designed centres from the early 2,000s face declining relevance due to structural flaws, weak catchment planning, outdated formats and anchor tenant exits.
Vacancy across 32 cities stands at 15.4 per cent, yet the real challenge is a shortage of quality space, especially in tier 2 cities. This gap creates a strong opportunity to revitalise dormant malls through design upgrades, tenant remixing and alternate-use conversions, the report noted. Success depends on accurate diagnosis and disciplined execution backed by strong design and management, it stated.
In contrast, markets with ageing malls, fragmented ownership or design inefficiencies demonstrate higher vacancy levels and weaker brand penetration. On an overall basis, the report added that the retail pulse points to a market where demand is strong, and consumer aspirations continue to rise.
High-performing Markets
A handful of cities clearly outperform the rest on key metrics like vacancy. The report noted that Mysuru (vacancy at around 2 per cent) is a tightly supplied market with very limited organised retail space. The scarcity of shopping centres relative to demand ensures that any quality centre attracts strong footfalls and remains almost fully occupied.
The report emphasised that Vijayawada (around 4 per cent) and Vadodara (around 5 per cent) are mid-sized cities with steady growth in consumer spending, yet new retail supply has been introduced cautiously. Thiruvananthapuram (around 6 per cent) and Visakhapatnam (around 6 per cent) are southern India’s rising retail stars, where robust consumer demand meets a new generation of well-managed shopping centres.
On the other hand, several cities struggle with significant vacant retail space and underutilised shopping centres, such as Nagpur (vacancy at around 49 per cent). Nearly half of this city’s shopping centre space lies empty, the report added. In Amritsar (around 41 per cent) and Jalandhar (around 34 per cent), developers built too many shopping centres in proximity, outpacing the depth of viable retail tenants.
The report pointed out that shopping centre density varies sharply, with cities like Mangaluru (1,521) and Lucknow (1,230) showing high penetration, while Pune (1,103) and Bengaluru (1,031) also reflect strong modern retail presence. In contrast, Surat (118) and Ludhiana (218) have limited mall infrastructure, where traditional formats dominate. |
