Despite strong competition from e-retailers, two mergers worth around $100bn (€84.6bn) have shown the investment appeal of shopping centres – and their determination to stay open.

Westfield Corporation has agreed to be bought by Unibail-Rodamco for $24.7bn. The deal will create a €61.1bn global shopping centre owner.

The merger comes less than a week after a similar tie-up between two listed European shopping centres owners Hammerson and Intu. This will create a £21bn (€23.9b) pan-European retail real estate investment trust (REIT).

Westfield shareholder’s were offered 17.8% premium to the previous day’s share price whereas Intu shareholders recieved a 27.6% premium.

Last month, US mall REIT General Growth Properties (GGP) confirmed that Brookfield Property Partners intended to take full control of it by acquiring the remaining 66% stake it did not already own.

There is speculation that Brookfield’s offer has been rejected, but GGP has yet to issue a statement.

Brick-and-mortar retail has had to compete with online retailers like Amazon, which are able to cut out costs associated with physical shops. Through these savings, online shops can provide better deals and offerings to customers as well as invest technology and logistics to boost sales.

Some physical shops have an online presence which acts as an added advantage over its peers.

According to Statista, as at 2015, Amazon was the world’s leading online retailer with about $79.3bn worth of revenue.

In 2016, retail e-commerce sales in the US amounted to over $322bn and are projected to surpass $485bn in 2021, Statista data revealed.

The Centre for Retail Research also revealed that UK online sales added £61.5bn to UK’s total retail sales in 2016 compared with £67.4bn in 2017, representing a rise to 17.8% from 2016’s 16.5%.

To say that a consolidation wave has now begun in the global mall business would be stating the obvious, Green Street Advisors says.

The environment is likely to have created a sense of urgency to get deals done and ushered in an usual period during which bidders will go after targets knowing that other potential bidders are too preoccupied with other deals.

“The smart chess players are all at the game now, and whether they are moving pieces on the board or not, they are undoubtedly studying whether they need to make the next move to get in the game,” Green Street Advisors says.

Take-out odds have increased materially in the US in recent weeks and investors in global mall REITs would be well-advised to consider whether a company will be a buyer or seller in today’s environment before arriving at an investment decision, the independent research and advisory firm said.

Colin Grant at Davy Research says the “negative sentiment towards retail may have reached an extreme”.

Grant says Unibail’s price-to-net-asset-value (P/NAV) rating had declined, from around a multple of 1.5 in the first half of 2015 to approximately 1, on concerns over the retail sector, given high profile bankruptcies of US department stores and retail outlets.

“The trend towards online spending has been a clear cause of concern for investors,” he adds.

However, everything has a price. “Intu’s P/NAV of 0.5 multiple proved too tempting for Hammerson, and the same motivation is behind this [Unibail] deal,” he says.

Maryland State Retirement and Pension System is looking to take advantage of mispricing of listed owners of shopping centres. It recently hired Morgan Stanley to manage $30m strategy to invest in mall REITs.

Angus Grierson, managing director of LGB Corporate Finance, says “Unibail-Rodamco’s acquisition of Westfield, following Hammerson’s recent move for Intu, signals that we will likely see more of these mega-deals as major property retail players seek to address the global consumer shift towards shopping online.”

With online shopping enjoying high double-digit growth rates, and recent surveys showing that for the first time a majority of shoppers go online for the most of their purchases, shopping mall owners are facing huge challenges to boost footfall and sales.

Grierson says acquiring Westfield provides Unibail-Rodamco with a unique platform of superior quality shopping destinations from which it can accelerate its strategy of concentration, differentiation and innovation, largely to enhance customer shopping experience at its malls and supermalls, offering more leisure and experiential activities.

“With ecommerce enjoying explosive growth and consumers increasingly moving online strategic acquisitions of this nature are likely to dominate M&A in the global property retail sector over the next few years,” Grierson says.