Can India Take A Leaf Out Of America’s Book As Malls Become New Homes To Ease The Housing Crisis, Especially In Indian Cities?

In the last one year, the quintessential American mall, once a bustling hub of shopping and leisure, is ‘transforming’ into living spaces. With department stores shutting down and retail spaces falling vacant, real estate developers in the U.S. have found a new purpose for these sprawling properties—housing.

This innovative solution makes one think – can India, going through its own housing crisis, especially in increasingly crowded urban cities adapt this model to address its challenges?

The U.S. Model. Malls Turning Into Communities

In the U.S., developers are creatively reimagining malls. Some are knocking down defunct department stores to make way for apartment complexes, often integrating them with the mall through walkways and green spaces. Others are repurposing shuttered storefronts entirely, creating mixed-use spaces that combine housing, retail, restaurants, and outdoor areas.

This trend has gained traction as the decline of the traditional anchor department store—whose downturn began in 2001—accelerated after the COVID-19 pandemic. With consumer habits shifting, malls faced dwindling foot traffic and rising vacancies.

According to Realogic, a real estate consulting firm, as of January 2022, at least 192 U.S. malls had plans to integrate housing into their premises, with 33 apartment projects completed since the pandemic began.

For mall owners, this approach makes financial sense. While top-tier malls continue to thrive, nearly 34 million square feet of U.S. mall space is vacant. Coupled with a nationwide housing deficit of 4.5 million homes, converting malls into residential spaces is a win-win: it addresses the housing shortage while revitalizing underutilized real estate.

The Indian Context, Could It Work?

India, too, is no stranger to mall vacancies. Many shopping centers, especially in smaller cities, struggle with low footfall and high vacancy rates. Simultaneously, the country faces a daunting housing deficit, particularly in urban areas where space is at a premium.

Repurposing malls into mixed-use spaces that include affordable housing could offer a viable solution. Malls in India are typically located in prime urban areas, close to transport hubs and essential services. Transforming these spaces into residential communities could provide much-needed housing while boosting local economies.

India’s Urban Housing Crisis. Chasing the Affordable Dream

India’s rapid urbanization is reshaping the nation’s demographic and economic landscape. Between 2001 and 2011, the absolute increase in India’s urban population surpassed that of rural areas for the first time. With projections indicating that nearly 600 million Indians—40% of the population—will reside in urban areas by 2031, the country is facing an urban housing challenge of unprecedented scale.

The Growth of Urban India

India’s urban population, which stood at 377 million or 31% of the total population in 2011, is expected to reach 535 million by 2026 and 654 million by 2031.

Alongside this demographic shift, the number of million-plus cities has increased significantly—from 16 in 1991 to 45 in 2011. Smaller towns, too, have multiplied, growing from 5,161 in 2001 to 7,935 a decade later.

Urban centers have emerged as hubs of commerce, infrastructure development, and employment, with many of the urban poor engaged in informal labor. However, this rapid growth has also putforth glaring gaps in housing availability and affordability.

A Nationwide Housing Shortage

The housing deficit in urban India is staggering.

According to a report by the Technical Group on Urban Housing Shortage (2012), the country faced a shortage of 18.78 million housing units in 2012. The problem is particularly severe in states like Uttar Pradesh (3.07 million housing units) and Maharashtra (1.94 million units). Other states, too, are grappling with significant shortfalls.

This shortage disproportionately affects the most vulnerable segments of society. Economically Weaker Sections (EWS) and Lower Income Groups (LIG), defined in 2012 as households earning up to ₹5,000 and between ₹5,001-₹10,000 per month respectively, accounted for 95% of the housing deficit. With income limits revised in 2018 to ₹3 lakh per annum for EWS and ₹3–6 lakh for LIG, these groups continue to dominate the shortfall.

The Irony of Urbanization

Cities are often viewed as beacons of opportunity, promising a better quality of life. Migrants from villages and smaller towns arrive with dreams of higher incomes and improved standards of living.

The housing shortage in urban India has escalated into a severe crisis. While the Ministry of Housing and Urban Poverty Alleviation (MHUPA) pegged the shortage at 18.78 million units in 2012, subsequent research estimated it to have surged to 34 million units by 2022.
The scale of the problem demands swift and comprehensive action, yet government responses have been sluggish.

For instance, between 2013 and 2016, only 407,485 houses were built under the Jawaharlal Nehru Urban Renewal Mission (JNNURM) and Rajiv Awas Yojana (RAY)—a pace that would take an estimated 138 years to address even the 2012 deficit.

The Misuse of “Affordable Housing”

The term “affordable housing” has often been a catch-all phrase, used by governments and private developers to justify land acquisitions without necessarily delivering meaningful solutions for the urban poor. Affordability is typically defined in relation to income, but its interpretation varies widely.

For low-income households, the lack of affordable housing is more than just a financial burden—it is a multifaceted deprivation. A large portion of their income goes toward rent or makeshift housing, leaving little for essentials like food, healthcare, and education. This imbalance exacerbates other forms of poverty, deepening their struggles.

Hence, Could It Work in India?

India’s urban dynamics differs significantly from the U.S., but the principle of repurposing unused spaces could be transformative.

Consider the following –

—Vacant Properties and Dead Spaces: Indian cities are dotted with unused government land, abandoned factories, and outdated shopping complexes. Repurposing these into affordable housing can unlock much-needed urban living spaces.

—Mixed-Use Development: Blending residential, commercial, and recreational facilities could make housing more accessible and sustainable, especially in high-demand cities like Mumbai, Delhi, and Bengaluru.

—Reviving Retail with Foot Traffic: Mixed-use housing near markets or retail hubs could benefit businesses by ensuring a steady flow of consumers.

Challenges, Yes Sure…

Adapting the U.S. model to India isn’t without its challenges. Regulatory hurdles, zoning laws, and the need for significant investment in redevelopment could pose barriers. Additionally, ensuring that these projects cater to India’s diverse housing needs—ranging from affordable to luxury segments—would require careful planning.

However, the potential benefits are immense. Developers could create sustainable urban spaces with integrated housing, retail, and leisure facilities, bringing in a sense of community while maximizing the utility of existing infrastructure. For the state govts, incentivizing such projects through tax benefits or streamlined approvals could accelerate adoption.

A Blueprint for the Future

India’s urbanization and housing challenges demand innovative solutions. By drawing inspiration from the U.S., where malls are becoming hubs of modern living, India could turn its struggling shopping centers into vibrant, multi-functional spaces.

As America redefines its malls for a new era, India has an opportunity to take a leaf out of its book—transforming empty malls into thriving neighborhoods and easing its housing crisis in the process.