Global Shopping Center Development Increases, Asia Leads Growth
According to CBRE's latest research, global shopping center development continues to grow with a total of 11.4 million sq. m. of new shopping center space opening in 2014, compared to 10.6 million sq. m. in 2013. With a further 39 million sq. m. under construction, emerging markets, particularly in Asia, are continuing to dominate the development pipeline of shopping centers.
China has the largest development pipeline in the world with a total of 5.7 million sq. m. of shopping centre space completed during 2014. In these 12 months, 44% of global development completions were in China, however, this amount of new supply was down by 14% in comparison to 2013. Outside of China, three other Asian markets--Seoul, Kuala Lumpur and Manila--featured in the top 15 most active markets. The Lotte World Mall in Seoul--at 480,370 sq. m.--was the largest completion in Asia Pacific last year.
Over 60% of the total pipeline of space currently under construction is located in China, accounting for nine out of the top ten most active markets. Shanghai tops the ranking for most new space under construction with 4.1 million sq. m., followed by Shenzhen with 3.4 million sq. m. and Chengdu in third place with 3 million sq. m. Chongqing and Guangzhou make up the top five most active markets. All these Chinese cities have more than 20 projects in the pipeline. However, most of the new supply in China is situated in the suburban areas.
New development in Asia Pacific on the whole spreads over 32 million sq. m., distributed over 36 cities--over 80% of this is situated in China, Thailand and India. However, supply of new development in China and India is at risk of slowing down due to the economy and mounting financial pressures on landlords. Construction of some shopping malls is on hold due to the lack of funding or in some cases landlords considering changing the projects to other uses.
"Retail development in the suburbs of key Chinese cities has been driven by improvements in city transportation and the development of decentralized residential zones, with over 80% of supply in tier I cities located in these areas. The catchment of these suburban malls is mostly limited to families nearby," says Joel Stephen, Senior Director, Head of Retailer Representation, CBRE Asia.
Elsewhere in Asia, leasing demand is robust in the gateway cities of Japan and Taiwan. Supply in prime locations, especially those that can accommodate flagship stores, is very tight. Tokyo and Taipei are among the most sought after retail markets in Asia in 2015, mainly driven by the growing number of mainland Chinese visitors.
"The factors driving the development pipeline of new space remain largely unchanged compared to last year. This includes a growing middle class population in emerging markets, the urbanization of large cities and a lack of high quality retail space required by cross-border retailers. Hence, new construction is dominated by Asia and in particular China" adds Mr Stephen.