Country has second largest pipeline of shopping centres under construction in Europe, the Middle East and Africa: CBRE
The UAE has the second largest pipeline of shopping centres under construction in Europe, the Middle East and Africa (EMEA), with 2 million sq m of mall space in the works, according to CBRE.
A total of 1 million square metres (sq m) of new shopping centre space was completed across 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 the global real estate advisor.
Turkey, 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.
The UAE has just under 2 million sq m of space currently under construction with Dubai accounting for the majority of upcoming developments in the country, CBRE said.
“With an increasing competitive retail landscape, new schemes coming onto the market are trying to differentiate themselves by providing amenities and new experiences that are difficult to replicate online. Meydan One Mall, for example, is expected to include more than 100 food and beverage outlets, the world’s largest indoor ski slope and a luxury brand quarter,” CBRE said.
Mat Green, Head of Research and Consulting, CBRE Middle East, said, “Retail demand in Dubai remains heavily orientated towards the major shopping centres, with prime malls continuing to demonstrate very high occupancy rates and more stable leasing rates.”
“Development activity in the retail sector remains buoyant with approximately 1.0 million m2 of gross leasable area set to be handed over between 2017 and 2019,” concluded Green.
Across Europe, the Eastern European countries are the most active shopping centre development markets, with Russia, Poland and Ukraine all showing strong development pipelines. 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.
Andrew Phipps, Head of UK & EMEA retail, CBRE commented: “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.”
Looking at the future, Phipps concluded, “While levels of constructions are down slightly across EMEA in 2017, completions looks set for a stable 2018. Although in some areas oversupply remains an issue and leasing activity has proved more difficult, investors in these locations are continuously focusing on differentiating themselves from other centres by promoting the hospitality and leisure aspects of retail.”