This article is from the Australian Property Journal archive
BUILDING a 30-storey hotel in China takes only 15 days and a 15-storey building, just two days, so it comes as no surprise that China now accounts for more than half of all retail shopping centre under construction (16.8 million sqm) globally, as the country moves from one construction boom to the next.
According to CBRE, an unprecedented 32 million sqm of shopping centre space is currently under construction globally, up 15% from last year’s figure of 28 million sqm.
CBRE found development activity is heavily concentrated in emerging markets, with China accounting for more than half of all the space under construction, at 16.8 million sqm.
In addition, seven of the 10 most active development markets globally are in China, namely Chengdu (2.9 million sqm) and Tianjin (2.1 million sqm), with Shenyang, Chongqing, Wuhan, Guangzhou and Hangzhou due to deliver over 1 million sqm over the next three years.
Other markets experiencing substantial expansion include Istanbul, Moscow, St Petersburg, Abu Dhabi, New Delhi, Kiev, Hanoi and Kuala Lumpur.
In comparison, CBRE found approximately 300,000 sqm of space is under construction in Melbourne and approx 200,000 sqm in Sydney.
CBRE head of EMEA retail research Neville Moss said the rapid growth of new shopping centre development in emerging, as opposed to ‘mature’, markets is attributed to a growing middle class, the urbanisation of large cities and consumer demand for better quality retail.
He noted that retailers, including many from western Europe and North America, are competing to take advantage of these new opportunities.
Across Europe, shopping centre development in 2012 increased by 10% to 1.71 million sqm; however, a large proportion (72%) was in Eastern Europe.
Istanbul was the most active European development market last year with the opening of seven new centres, including Marmara Park (94,000 sqm) and Trump Towers (41,000 sqm). Istanbul will be the most active development market in coming years with 32 centres currently under construction.
Europe’s other highly active development market is Russia which, like Turkey, is benefiting from strong economic growth and rising incomes. In St. Petersburg, new residential areas supported by enhanced road and rail links are driving shopping centre development, with 0.5 million sqm under construction.
Moscow has the largest development pipeline, with 815,000 sqm due to open over the next two to three years. In neighbouring Ukraine, Kiev has 445,000 sqm under construction in eight centres, making it the fourth most active development market in Europe, and attracted a record 40 new international retailers last year.
“The fact that a substantial majority of new shopping centre development in Europe is within its emerging markets is hugely significant. Prime space is in short supply in mature markets and retailers are increasingly turning to these emerging, but increasingly promising, alternatives.
“However, cross-border retailers continue to seek prime space and much of the new space in emerging markets is in peripheral areas of the large cities, appealing only to local retailers. In many cities, the mismatch between demand and supply has led to increasingly high rents in prime areas and high vacancies elsewhere,” he added.
“Another feature of both mature and emerging markets is that the proportion of mixed-use is increasing. Larger shopping centres of the future will incorporate major leisure attractions and other uses to create a more appealing customer experience and meet the challenge of online retailing.” Moss concluded.
Property Review