Shopping malls in India were once considered to be one of the major attractions as well as one of the symbols of prosperity in the Indian economy. These days, however, same shopping malls are standing half-empty, especially in smaller towns.
Current situation is not likely to improve, as vacancy levels are increasing and the consumption remains low. Economist Bibek Debroy says that there has been excess capacity in smaller towns and little demand. Debroy added, “These boomtowns haven’t seen a huge consumption story yet and salary levels too haven’t increased the way they were expected to”.
The vacancy levels in malls across the country are rising at an alarming rate. In smaller towns, more than a third of the space is unoccupied, against just 7% back in 2007. Moreover, supply of the retail space has increased dramatically. On the other hand, the demand from retailers and overall consumption has gone down.
This situation appeared due to the slowdown in economy and lack of disposable income in the hands of youth in smaller, urban areas. Mall owners are now considering to lease empty spaces to offices and banks as it is not easy to close leasing deals with the retailers these days.