Domestic brands, consumer demand lift India retail leasing to four-year high

Fashion, F&B, and entertainment led retail space demand in H1 2026.

India’s retail market recorded its highest half-yearly leasing activity in four years in the first half of 2026, driven by retailer expansion, strong domestic consumption and demand for experience-led shopping destinations, according to JLL.

Gross leasing volume across India’s top seven markets reached 6.27 million sq ft between January and June 2026, up 10.5% from 5.68 million sq ft in H1 2025.

“India's retail real estate sector is in the resilient growth phase, where demand is surging to record levels, reinforcing the sector’s position as a key driver in the economy,” said Saket Amrit, head-retail services, India, JLL.

Domestic retailers remained the main driver of leasing activity, accounting for 79.1% of total volume as brands expanded across formats.

International retailers also continued to grow, with gross leasing by international brands rising 62.1% year-on-year despite a slower pace of new market entries.

Retail leasing momentum strengthened in Q2 2026, reaching 3.18 million sq ft, up 2.7% from 3.09 million sq ft in Q1 2026.

Mumbai, Delhi NCR and Bengaluru led demand, accounting for 29%, 24% and 23% of total leasing volume, respectively. Together, the three markets contributed more than 75% of leasing activity.

Kolkata recorded the strongest growth among the major markets, with leasing volume increasing 87.3% year-on-year following the completion of a new mall in Q1 2026. Delhi NCR and Mumbai posted growth of 75.9% and 69.6%, respectively.

Fashion and apparel remained the largest contributor to leasing activity at 33%, followed by food and beverage at 18% and entertainment at 16%.

Entertainment leasing increased 41.5% year-on-year, supported by rising demand for family entertainment centres, gaming zones and children’s play areas. Meanwhile, grocery and daily needs leasing declined 39% as quick commerce and dark store networks expanded.

The sector’s growth came despite limited new retail supply. New shopping mall additions totalled 0.82 million sq ft in H1 2026, down 64% from H1 2025. Total shopping mall stock reached 92.08 million sq ft.

Lower supply and continued demand pushed mall vacancy rates across the top seven cities down to 11.15% in H1 2026 from 11.60% a year earlier.

Shopping malls accounted for 43.1% of total leasing activity in H1 2026, up from 38.9% in H1 2025, as retailers increasingly prioritised organised retail spaces. Mall leasing volume grew 22.4% year-on-year.

JLL said India’s retail sector is entering its next growth phase, supported by a pipeline of more than 45 million sq ft of retail developments expected by 2030, alongside continued investment in technology-enabled and experience-focused retail formats