NEW DELHI: Owing to growing preference towards online shopping and the advent of top ‘Grade A’ class shopping centres, number of ghost shopping malls, characterised by a vacancy rate exceeding 40%, rose from 57 in 2022 to 64 in 2023 across eight major cities, said real estate consultancy firm Knight Frank on Tuesday.
The consultant noted that there has been a sharp rise in low-performing retail assets with nearly 13.3 million square feet (mn sq ft) of retail shopping centre space categorised as ghost shopping centres.
There has been an increase of 238% year-on-year (YoY) in ghost shopping centres by gross leasable area (GLA) since 2022 in the prime markets. As a result of the rise in vacant spaces, Knight Frank estimates that loss of value to be at `6700 crore or $798 million in 2023.
National Capital Region (NCR) accounted for the highest Ghost Shopping Centre stock measuring at 5.3 mn sq ft (rise of 58% YoY), followed by Mumbai with 2.1 mn sq ft (rise of 86% YoY) and Bengaluru with 2.0 mn sq ft (rise of 46% YoY). The sharpest rise in Ghost Shopping Centres was recorded in Kolkata (237% YoY), albeit at a lower base.
Knight Frank stated when new Grade A shopping centres were opened, many retailers made a beeline to expand their presence. This led to a high double-digit vacancy in Grade C structures. Ghost malls often fail to attract customers’ and retailers’ interest due to various constraints such as bad location, obsolete design, strata sold arrangements in addition to dilapidation and unattractiveness of structures.
Shishir Baijal, Chairman & MD, Knight Frank India, said “Grade A malls have excelled, maintaining robust occupancy, foot traffic, and conversion rates, thereby delivering value to their customers. Conversely, Grade C assets and those classified as Ghost Shopping Centres are lagging, prompting landlords to take action to rejuvenate or divest such properties.”
In tier 1 cities, total number of shopping centres have reduced in a period of one year. Despite new addition of 8 new retail centres, number of shopping centres reduced to 263 in 2023 as 16 shopping centres were shut down over the last year.