European shopping centre development shows growing trend for extensions and refurbishments
New research has shown that the amount of new shopping centre space completed across Europe declined by 4% year-on-year to 1.3 million square metres in the first half of 2016. In addition, construction levels for new schemes fell by 21%.
The figures from global property advisor CBRE also show that shopping centre extensions under construction made up 21% of all new developments in the first half of 2016 to mark an increase of approximately 50% year-on-year.
Shopping centre development activity has largely remained concentrated in Eastern European markets with Russia accounting for 28% of total space under construction followed by Turkey with 14%.
In the UK shopping centre pipeline of space under construction has increased to 441,400 square metres which is a 75% rise on the first half of 2015. Extensions on existing centres accounted for half of the space. CBRE said approximately 28 developments are expected to complete by the end of 2017 although the UK’s decision to leave the European Union may result in a reduction in the number of future developments due to a drop in consumer confidence and changes to regulations affecting property.
In the Ukraine there is 603,000 square metres of space currently under construction, which is 41% of the existing stock. The high pipeline volume, notably in Kyiv, is due to an improvement of economic fundamentals after an economic downturn in 2014 and 2015 that halted construction.
Poland has a total of 524,000 square metres of new space under construction although a new law on retail sales tax that may be introduced in the country in September may decrease profitably for the retail sector and lead to consolidation.
In the Nordics, Finland has the largest pipeline of space under construction with approximately 465,000 square metres, with 22% of it existing space.
Meanwhile, Western Europe extensions and refurbishments to existing schemes comprise around a quarter of total construction in the region due to lack of supply. France has 440,700 square metres, Italy 425,700 square metres and Germany 126,800 square metres.
Andrew Phipps, head of UK and EMEA retail research, said: “The level of shopping centre completions and space in emerging markets such as Turkey and Russia have seen a slowdown in the first half of 2016, especially in Russia where development levels had peaked in 2014 and 2015, due to investor demand from oil revenue. However, we are seeing a trend towards extensions and refurbishments to existing centres, in particular in the UK, which will account for over 20% of new shopping centre completions in the next few years.”
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