India’s small malls are increasingly turning into ghost malls as consumers move towards online purchases and bigger shopping centres for a better experience, a consultancy report said on Tuesday.

Mall properties with a vacancy rate of more than 40 per cent have been termed ghost malls.

The number of ghost shopping malls increased to 64 last year from 57 in 2022 across eight major cities as retailers and consumers prefer premium properties, according to Knight Frank.

The real estate consultant on Tuesday released a report titled ‘Think India Think Retail 2024’ capturing the dynamics of shopping centres and high streets across 29 cities.

The consultant found a sharp rise in low-performing retail assets across eight major Tier I cities.

As many as 64 shopping malls with about 13.3 million square feet of gross leasable area have been categorised as ‘Ghost Shopping Centre’ in 2023.

In terms of area, this is up 58 per cent from 8.4 million square feet in the preceding year.

As a result of the rise in ghost shopping centres, Knight Frank estimated the loss of value to be at ₹6,700 crore or $798 million in 2023.

The National Capital Region (NCR) accounted for the highest ghost shopping centre stock measuring at 5.3 million sq ft (rise of 58 per cent year-on-year), followed by Mumbai with 2.1 million sq ft (rise of 86 per cent YoY) and Bengaluru with 2 million sq ft (rise of 46 per cent YoY).

Hyderabad is the only city to record a decline in the ghost shopping centre stock by 19 per cent YoY to 0.9 million sq ft in 2023.

The sharpest rise in ghost shopping centres was recorded in Calcutta (237 per cent YoY), albeit at a lower base.

Of the total 64 ghost malls across the top eight cities, Knight Frank data showed that 21 such malls are in Delhi-NCR, 12 in Bengaluru, 10 in Mumbai, six in Calcutta, five in Hyderabad, four in Ahmedabad and three each in Chennai and Pune.

“The momentum of consumption, propelled by rising disposable incomes, a youthful demographic, and urbanisation, tilts in favour of the organised retail sector,” Shishir Baijal, chairman & managing director of Knight Frank India, said.

An enhanced retail experience remains crucial for shoppers, highlighting the significance of physical retail spaces, he added.

“Grade A malls have notably excelled, maintaining robust occupancy, foot traffic, and conversion rates, thereby delivering value to their customers," Baijal said. With inputs from Reuters