Growth problems

India’s luxury market is experiencing rapid growth, with an increasing number of affluent consumers driving demand. According to Euromonitor, the luxury goods market in India was valued at $6 billion in 2022 and is projected to grow by 10% annually over the next five years. Despite this growth, the luxury segment remains relatively small, concentrated primarily in Tier 1 cities like Mumbai, Delhi, and Bangalore.

We look at the reasons why:

Fast-growing but niche
While the luxury market in India is growing, it still represents a relatively small proportion of the global luxury industry. The primary consumer base is limited to India's 1.5m millionaires and affluent individuals. While these consumers are highly familiar with global luxury trends and products, they represent only a small portion of the overall luxury spending in the global market.

Furthermore, many of these individuals are frequent international travellers, raising questions about how much they will choose to spend locally. A study by Credit Suisse revealed that 48% of wealthy Indian consumers prefer to shop for luxury goods abroad due to a wider selection of products, lower taxes, and a more prestigious shopping experience.

Overseas luxury shopping
Indian consumers who are wealthy enough to buy luxury domestically often choose to shop internationally. Cities like Milan, Paris, and London offer a more expansive luxury shopping experience, with better in-store services, wider brand selections, and tax-free benefits.

According to a survey by Deloitte, 65% of Indian luxury shoppers prefer purchasing luxury goods abroad, especially during international trips. These consumers are drawn to the prestige of global luxury hubs, further complicating domestic retail strategies. For developers, the key question is whether Indian malls can replicate enough of this experience to retain domestic spending.

Lack of suitable schemes
India faces a challenge in providing appropriate retail environments for luxury brands. With fewer than 20 high-end malls meeting international luxury brands’ expectations, options are limited. Unlike markets such as China or Europe – where luxury brands can comfortably establish themselves on high streets – India lacks the infrastructure and environments to make high street spaces a viable alternative, making it difficult for brands to find locations that match their desired prestige and visibility.

Design dilemma
The scarcity and comparative high cost of land in India’s major cities mean that, rather than the sprawling, large-scale malls of the Middle East – of which luxury retail forms a part - many new malls in India have smaller footprints and are built vertically. Knight Frank highlight that in malls, 80% of footfall tends to be concentrated on the lower two floors. If luxury retail takes space on the lower floors, filling upper levels can present a challenge, with footfall dissipating by each vertical level and luxury retail attracting a smaller volume to begin with. Operators can be left with the challenge of trying to populate upper levels with uses that are somewhat aligned with luxury or attracting a different audience to sub-prime space.

Balancing size and accessibility
Another major challenge Indian developers face is creating malls that balance size and accessibility. Larger malls attract greater footfall, but accessibility is key and congestion in major cities like Mumbai or Delhi can and does inhibit shoppers from traveling long distances. CBRE found that 64% of Indian consumers are unwilling to travel more than 30 minutes to visit a shopping destination, even if it offers luxury products.

Managing ROI
JLL found that luxury brands in India generally occupy only 5-7% of total mall gross leasable area (GLA) but they account for up to 20% of rental income, making them a high-risk, high-reward tenant. With luxury tenants often more demanding in their requirements, developers in India targeting the luxury sector face a critical decision: should they maximise GLA and risk underutilised upper floor space or develop a lower quantum of space that allows for greater flexibility in design and can be catered to the exact needs of luxury brands and consumers


The Indian luxury market is undoubtedly growing, but it remains fraught with challenges. Developers need to carefully balance the design, location, and tenant mix of their schemes to maximise return on investment. As the market evolves, striking a balance between exclusivity, accessibility, and overall consumer experience will be critical for sustaining commercial success.

Mukhriz Mustamir