Eastern European markets lead shopping center pipeline
12 AUGUST 2015
Eastern European markets continue to lead shopping center development with 60% of space under construction located in Russia and Turkey, reports CBRE.
During H1 2015, the total amount of new shopping centre space completed across Europe stands at 1.36 million sq m and just under 12 million sq m under construction, with Russia responsible for over half of completions. Russia and Turkey have a combined total of 7.18 million sq m of shopping centre space under construction. Activity in Turkey has been driven by an increasing affluent young population, whilst Russia benefits from a number of cities with large middle class populations.
However, the overall levels of completions and space in the pipeline are starting to decrease due to a slowdown in Russia and Turkey. The scale of Russian and Turkish development naturally impacts the overall level of construction in Europe due to the large volume of space under construction in these markets. Turkey’s shopping centre market has gone hand in hand with the country’s economic growth – with 81% of Turkey’s entire stock delivered in the last decade.
In H1 2015, the number of completions in Turkey began to dramatically slow down with only 84,200 sq m in gross leasable area resulting in approximately only 11% of the planned new openings for the first half of the year being actualised as scheduled. In most cases, the current economic climate has seen the delivery dates of many projects strategically extended until Q4 in line with the forecast stabilisation of the Lira towards year end. Nevertheless, the elevated retail density in many urban catchments has left only marginal room for further new development. This has seen a marked decrease in dedicated retail developments and even a reduction in the allocated construction ratio, and resulting configuration, of retail in mixed use schemes.
In Russia a number of schemes have been coming to market with large volumes of vacant space due to slow down in demand from retailers.