CBRE’s annual study of global retail development showed that builders have completed 12.5 million square metres shopping centres globally last year, an 11.4 per cent increase from 2015. China dominated the top ten most active global markets with seven Chinese cities making the list. Melbourne ranked number ten — the only non-Chinese city in the Asia Pacific to have made the top ten. Notably, the redevelopment of Melbourne’s Chadstone Shopping Centre introduced many new retailers to the city — half of the city’s new retail entrants in 2016.
Australia’s retail market is undergoing redevelopment with a construction boom that boosted total completions to about 680,000sqm in 2016, the study revealed.
Many regional centre owners, particularly domestic owners, have capitalised on favourable market conditions, including a low cost of borrowing and strong demand from expanding retailers. Landlords have placed significant emphasis on food and leisure offerings in order to draw and retain foot traffic.
Developers completed more retail centers across the globe last year than in 2015, yet momentum appeared to wane in many countries as retailers strive to find the right balance of brick-and-mortar and e-commerce operations.
“In the omnichannel era, retailers are focused on ensuring that they have the optimal mix of brick-and-mortar stores and e-commerce operations, so they are using sophisticated analytics and market knowledge to choose the best store sites rather than the most store sites,” said Anthony Buono, chairman of CBRE’s global retail executive committee.
Meanwhile, construction activity overall has slowed in many markets amidst a more cautious approach by investors and occupiers. The global pipeline of retail centres under construction declined by 22 per cent year-on-year to 33.5 million square metres at the end of last year, according to the CBRE report.
The Asia Pacific region, particularly China, remains the global hotspot for retail construction totaling 26.6 million square metres —79 per cent of the global total. Of this, China accounted for 19.7 million square metres.
More than 90 per cent of Asia Pacific cities hosted large-scale retail construction in 2016 compared to 56 per cent of cities in the Americas and 14 per cent in Europe, the Middle East and Africa.
“The Chinese retail market is showing some signs of recovery. Leasing demand is stabilizing despite oversupply concerns,” said Joel Stephen, senior director, Advisory and Transactions, Retail, CBRE Asia. “Retail markets are thriving across Asia Pacific, with strong demand supporting construction in markets like Melbourne, Brisbane and Ho Chi Minh City.”
China’s largest volumes of retail space under construction are in Shenzhen and Shanghai, which together account for about 40 per cent of the pipeline in China. Elsewhere, retail construction remained relatively limited in India, especially tier-one cities like New Delhi and Mumbai, whilst major retail markets in Asia such as Tokyo, Hong Kong and Seoul, are all anticipating mix-used development in their CBD locations.
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