Shopping centre ownership undergoes global shift - ICSC

Retail investment opportunities exist across Turkey and Russia but investors’ appetite still hasn’t recovered for areas still considered higher up the risk scale.

The remarks were made during a panel session on global shifts in shopping centre ownership at the 2013 ICSC European Conference in Stockholm last week.

Across Europe, the theme of the last 18 months has been on stability and liquidity, with capital focusing on defined areas such as the UK & Germany and prime in northern and western markets. Surprisingly, considering its difficult economy, Spain is now being reconsidered by some investors.

Speaking on the panel James Bury, Chief Executive at Pradera, said: 'There is interest in Southern Europe and in Spain where the market is starting to sort itself out, however Italy remains a difficult market.'

For real estate investment management company Bouwfonds, the immediate future is less about wider expansion than about the refurbishment and improvement of existing stock. CEO Jaap Gillis added: 'Turkey is growing and demographically sound, and they have opportunities for retail development, as does Russia, but investors are not wanting to go there. Looking at Western European markets, there are still difficulties and the banks have to clear their balance sheets.'

Elsewhere across the world, there are significant opportunities across parts of Africa, according to Mike Rodel, Executive Director of emRE, emerging market Retail Enterprise (South Africa).

AFRICA
'South Africa has had two decades of growth, and there was a very strong development phase in the decade leading up to 2008. Since then it has slowed but because of relatively high yields and a stable market we came through the recession in pretty good shape. Capital is coming in but larger funds are eating up the smaller funds. There is still a huge undersupply of retail and the economy is not huge but we have seen a sizable amount of first world capital coming into our economy which is still growing.'

Across Africa, there are investor-friendly countries with the right treaties in place that will help protect investment. Rodel added: 'The right infrastructure and efficiency in import processes are also important. The big focus is Nigeria and Ghana, which have exploding economies on the back of oil. For us, East Africa is closer and we focus on countries with the right structure and take a forward view about they are going. A key component is to make sure you are offering retailers enough of a footprint to make their entry and investment into a country is worthwhile.'

SOUTH AMERICA
Over the last few years, South America has seen a huge growth in retail development, but for David Toledo, General Manager at Centro Comercial Unico - Capital S.A, Colombia is currently the hottest investment destination. 'We have ten cities with over a million people and 25 cities with over half a million in population. We have a peace process that is working, a strategic geographical position, bordering both the Atlantic and Pacific and the third largest population after Brazil and Mexico.'

European investors are interested in Latin America and are already investing in Brazil and looking at Mexico. But Toledo warns that it is a different continent. 'Our culture is different and we are still developing the structures which are well established in Europe.' Shopping Centres in Latin America are largely family owned, with currently little corporate ownership.

In Brazil, 44 malls will be built in the next 24 months, and across China, 2.5 million square metres of shopping centre stock is being built right now. Retail development is also exploding in the Middle East.

According to Brad Hutensky, Chair of ICSC Worldwide: 'The huge increase in growth we are seeing is because of the explosion of the middle class, especially in the BRIC countries.'

Hutensky predicted little or no growth in retail development in the US, or in Europe.