11.1 MILLION SQ M OF NEW SHOPPING CENTRE SPACE UNDER CONSTRUCTION ACROSS THE EMEA REGION
A total of 1 million square metres (sq m) of new shopping centre space was completed across Europe, the Middle East and Africa (EMEA) in the first six months of the year with a further 11.1 million sq m of new space currently under construction, according to leading global real estate advisor CBRE.
Turkey, United Arab Emirates (UAE) and Russia are the most active countries in terms of shopping centre development and accounted for more than 50% of total development under construction in 2017.
Turkey saw 300,000 sq m of new space completed in the first half of the year and continues to have the largest shopping centre development pipeline in H1 2017 with 2.2 million sq m of new space under construction.
The UAE follows closely behind with just under 2 million sq m of space currently under construction with Dubai accounting for more than three quarters of developments in the country. New schemes coming onto the market are trying to differentiate by providing amenities and experiences that are difficult to replicate online. One notable new scheme doing this is Meydan One Mall, which will include more than 100 food and beverage outlets, the world’s largest indoor ski slope and a luxury brand quarter.
Across Europe, the Eastern European countries are the most active shopping centre development markets, with Russia, Poland and Ukraine all showing strong development pipelines. Russia’s development pipeline currently stands at 1.9 million sq m and this is largely due to improving macroeconomics fundamentals coupled with strong forecasted retail sales which is starting to improve developer sentiment.
The UK has the largest shopping centre development pipeline in Western Europe with a total of 460,000 sq m of new space under construction and due be delivered over the next five years.
France has the second largest shopping centre pipeline with 409,000 sq m and Spain is slightly behind with 345,000 sq m. Spain’s economic recovery is improving asset performance and investor and developer sentiment.
Extensions to existing shopping centres continue to be a popular route to achieving additional floor space, especially in Western European markets. Extensions made up 20% of shopping centre stock in EMEA with the UK, Ireland and Austria all showing sizable extension pipelines. The UK has one of the largest shopping centre extension pipelines in Europe with Westfield London making up 69,000 sq m.
The level of shopping centres under construction remains closely correlated to forecasted retail sales. Unsurprisingly, markets that are forecasted to have strong retail sales are particularly attractive to developers as retailers and occupancy are reliant on tapping into these markets for continued growth.
Shopping centre extensions are increasingly driving the increase in the amount of construction levels and provide further evidence that well-placed schemes are willing to adapt to the structural shift at play in the retail market and counter the greater e-commerce adoption by providing more space for experience led retail.