28 June 2012, Hong Kong – Global shopping centre development continues apace with growing middle class populations and retailer expansion leading to unprecedented levels of construction, particularly in Asia, and new openings, largely in emerging markets, according to CBRE.
In the recently published CBRE Global ViewPoint, CBRE measured the level of shopping centre development in 180 of the world’s major cities to identify the most active markets, both in terms of 2011 completions and space currently under construction. The research found that development activity has reached significant levels, with 29.6 million square metres under construction globally – equivalent to all the combined existing space in France, United Kingdom and Germany – while 7.8 million square metres of new space opened in 2011.
Emerging markets such as China, Turkey and India are far more active than the more mature markets of Western Europe and North America. In 2011, new shopping centres opened in 63 (35%) of the cities covered in the survey, of which 50 were in emerging markets. In contrast, only five cities in Western Europe saw the opening of a new centre last year.
Chinese cities currently dominate shopping centre construction activity. In the 180 cities analysed, exactly half of all the shopping centre space under construction is in China, with Asia accounting for 70% of all schemes currently being built. Mr. Sebastian Skiff, Executive Director of CBRE Retail in Asia, commented,” Due to the rapid increase of middle class populations around the world, shopping centre developments are on the rise to satisfy growing consumer demand. The shopping centre concept has morphed into an integrated element of retail development, especially in the East. With development now expanding not only in Beijing and Shanghai, but also deeper into the highly populated provincial capitals, China is topping the charts for development growth and seeing great opportunities for expansion in these large cities.”
Hong Kong on the other hand is one of the most mature retail cities in Asia and remains the world’s top destination for luxury brands, according to CBRE’s report “How Global is the Business of Retail 2012” published in April. While unlike a number of other Asian markets it is not seeing a surge in new shopping centre development due to extremely tight land supply, there is however an increasing shift in focus to shopping malls as both retailers and shoppers look for new options when the traditional prime shopping streets are becoming largely monopolised by international luxury brands targeting mainland Chinese shoppers.Mr. Joe Lin, Senior Director of Retail Services for CBRE Hong Kong said, “Amid the surge of rents in Hong Kong’s major shopping streets, retailers have increasingly been forced to shift their focus to shopping centres and are targeting not only traditional CBD malls but are also now actively considering other suburban malls in areas such as Shatin, Tseung Kwan O and Tuen Mun. For many new retailers to the Hong Kong market, prices on the high street have reached prohibitively high levels and malls are becoming an increasingly acceptable entry point to minimize the high leasing cost on the street.“
While surging rents on the high street is a concern to many retailers, according to Lin, this increased focus on shopping centres is actually helping develop and increase the scope of the Hong Kong’s retail market and the shopping habits of its local shoppers: “From the consumers’ perspective, it is now more attractive to do their shopping indoors. Not only are we seeing an increasing variety of retailer choices compared to the tourist-focused high street shops, there has also been a marked improvement in the malls themselves, with better customer service and facilities such as wifi, high-end sanitary facilities, free cell phone battery charging, free baby-stroller, locker, and higher quality entertainment events provided in recent years. For landlords, the increase in leasing demand has helped to raise their tenant mix and ensure stable rental incomes, while helping to reinforce the value of active refurbishment and investment in better quality facilities.”Globally, retailers have shifted their focus to exploring new markets and new opportunities in which they are able to grow their businesses and carry out crossborder expansion initiatives. This strategic growth is contributing to the escalation of high quality retail space in emerging markets such as China, Malaysia and Vietnam.These markets are seeing an influx of retailers and outside interest which consequently fuels the demand for new developments. Mature markets such as Western Europe and North America have substantial retail development offerings and as a result, it is unlikely to see such expansive growth in new malls, but rather a constant elevation of what already exists as owners respond to new formats required by retailers, and more modern facilities preferred by most consumers.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
