EUROPE - Fiscal austerity, high unemployment and scarce bank funding will result in further delays in the European shopping centre pipeline this year, according to Cushman & Wakefield.
Developers last year posted a 1% increase in projects completed over 2010.
However, 19 of 34 markets surveyed saw a year-on-year decline in completions, with radical drops in Germany - the lowest since the 1980s - the Czech Republic, Austria, Slovakia and Croatia.
Germany is expected to pick up in 2012.
Meanwhile, activity has slowed in the Polish market, despite a relatively healthy pipeline in large regional cities.
Despite market-specific jitters, CEE projects accounted for 65% of new space added last year and are forecast to make up 61% this year.
Shopping centre completions are not necessarily a barometer for the broader property market because it takes up to three years to complete a project.
A significant forecast drop in Czech supply, for example, is based on a decline in retail sales in late 2008 and throughout 2009, which meant very few retail schemes started construction.
An analyst at Cushman & Wakefield said: "With almost all major Czech towns having at least one shopping centre, development has become more risky, and banks had to get comfortable with financing a product that will have competition from day one."
The analyst also cited a "generational shift" in shopping centres, with a strong focus on refurbishment - a theme echoed in the French market, where extensions make up 40% of the pipeline.
Shifts in ownership from developers to institutional investors have also slowed down the pipeline.
"We could argue that investors in most cases already have an income stream secured and tend to be slower because the pressure to develop is smaller," the analyst said.
Low risk tolerance among investors will potentially negatively affect supply in some markets.
Although more supply will be forthcoming overall, there is little appetite at the secondary end of the market.
The report said: "While demand for prime retail assets remain strong overall, a shortage of affordable finance, coupled with selective occupier demand, are likely to impact on investors' tolerance for risk across many parts of Europe."
After prime assets traded in €1bn last year, the gap between prime and secondary will broaden this year.
At the same time, current owners might hold on to assets they would rather divest in order to demonstrate a "story" for the property, the analyst said.