European shopping centre development completions in the first six months of 2016 totalled 1.3 million m2, a 4% fall on the same period last year, according to a new report from CBRE.
Over nine million m2 of new retail space is under construction, a 21% fall on last year. However, work on mall extensions made up 21% of all new developments in the first half of 2016, an increase of approximately 50% year-on-year.
The report said that shopping centre development activity has largely remained concentrated in Eastern European markets, with Russia accounting for 2.64 million m2 (28%) of total space under construction. Turkey registered 2.22 million m2 (14%) of completed schemes but a dearth of new developments, due to market saturation. However, CBRE suggested redevelopments may potentially increase.
In the UK, space under construction has increased to 441,400 m2, a 75% increase on H1 2015, half of which are extensions on existing centres, notably the Westfield London Shopping Centre extension and the new Victoria Gate Shopping Centre in Leeds. Approximately 28 developments are expected to complete by the end of 2017.
CBRE said that Brexit may reduce the number of future UK shopping centre developments due to a drop in consumer confidence and potential legislation change, but that anything currently under construction should continue as planned with retailer demand for space remaining strong. The falling value of the pound is likely to make UK investment opportunities particularly attractive to overseas investors.
A boom in the Ukraine - where around 603,000 m2 is under construction, equivalent to 41% of the existing stock - is due to an improvement of economic fundamentals after the downturn of 2014-2015 which halted construction. Poland has 524,000 m2 of new space under construction, but a change in the retail sales tax proposed for September may lead to consolidation in the sector.
In the Nordics, Finland has the largest pipeline of space under construction, approximately 465,000 m2, 22% of existing space.
In Western Europe extensions and refurbishments to existing schemes comprise around a quarter of total construction. France has 440,700 m2, Italy has 425,700 m2 and Germany currently has 126,800 m2.
