Russia delivered more new shopping space in the first six months of the year than any other country in Europe. Combined with Turkey, which had the second highest number of shopping centre completions, the two countries accounted for nearly half of all European shopping centre space opened in H1 2013, according to the latest European Shopping Centre Development report published today by global property consultants Cushman & Wakefield (C&W).
A total of 1.8 million sq.m of new shopping centre space was added to the European market in H1 2013 and whilst significantly below the 3.4 million sq m in the previous 6 months due to a number of project delays, a total of 4,9 million sq.m. is projected for completion by the year end with Central and Eastern Europe (including Turkey) expected to account for 70% of the total pipeline.
Although still the third largest market, Russia is poised to overtake UK as the second largest market with a total of 3.2 million sq m under construction and due for completion in by the end of 2014. Turkey followed in second place as 422,500 sq.m of gross lettable area (GLA) were added in the first six months of 2013, with the largest opening Vialand Theme Park which included 110,000 sq.m of shopping centre GLA.
The UK was in third spot with 182,600 sq.m, meanwhile, Poland and Germany were fourth and fifth respectively, together delivering 214,200 sq.m of GLA. Development in the UK picked up in H1 2013 when compared with the record low total recorded in 2012, when almost 37,000 sq.m was delivered – the lowest figure in over 52 years. Development activity consisted of seven new schemes and four small extensions of existing shopping centres.
Looking forward to 2014 there are already 171 new schemes and 65 extensions due to be delivered across Europe, with the pipeline volume estimated at 6.2 million sq.m of GLA. Shopping centre growth in Finland is expected to be the strongest among Western European countries. Despite no space being added in the first sixth months, total floorspace in the country is expected to be enlarged by 13.7% by the end of 2014. Similarly, although development activity in Norway was extremely subdued in H1 2013, with no space added, it is anticipated to improve considerably, particularly in the second half of 2013.
The investment market meanwhile is once again growing more alert to the potential of emerging markets to deliver for the longer term. Retail demand in general has continued to steadily increase across Europe, with shopping centres the main focus for larger funds, but with a strong demand for modern quality schemes which are typically in short supply, investors have had to adjust their search area and take on board more risk, leading to increased demand in previously overlooked markets such as Southern as well as Central & Eastern Europe.
The retail development pipeline has been adjusting to the domestic market since 2010, reducing the level of new supply. The only retail developments, in 2012 were two small retail parks in Greater Lisbon and Central Portugal and the only newsworthy item prior to the end of second half 2013 was the AlgarveShopping expansion. No new projects are expected to open before the end of the year.
There are only three shopping centres under construction. They include the Alegro Setúbal based on an expansion of Setúbal’s Jumbo Hypermarket, with an overall surface area of 42,500 sq.m, scheduled to open at the end of 2014 and the Dolce Vita Braga (42,000 sq.m) and Évora Shopping
(16,000 sq.m), both of which are owned by domestic banks which are also due to open shortly.