According to a recent Cushman & Wakefield global retail survey, global trends for shopping center growth remain optimistic. While emerging economies have slowed and growth will not match that of 2012 and 2013, substantial supply additions are expected in major emerging markets such as Brazil, Russia, India, and China from 2014 to 2016.
Both the massive rise in ultra-high net worth individuals worldwide, as well as improving global economic fundamentals and increased consumer sentiment, bode well for the property industry. Global GDP is expected to expand at a rate of 3.4 percent, the fastest since 2011. Household spending will play a big role in achieving GDP growth, with the United States, the eurozone, and China leading the way. Despite recent slowing inflation, China is projected to post a world-leading 4.5 percent increase in consumer spending in 2014, which will accelerate to 5.1 percent in 2015. pearl apartments
"As the global economy moves from recovery to expansion, retail real estate development is often seen as a barometer," said Matt Winn, Global Retail COO and Head of Retail in the Americas. Although the economies of South America have slowed, Brazil, Colombia, Peru, and Chile will all see increases in supply in the coming years. Also in the United States, where the ratio of shopping center space per capita is higher than anywhere else in the world, there are projects under construction totaling more than 100,000 square meters. "In the countries and markets surveyed, more than 1,650 new shopping centers were delivered in 2012 and 2013." These buildings account for 63.9 million square meters of GLA, or 7.0 percent of the total current inventory. The bulk of the newly added room was driven by the United States, Russia, Brazil, Mexico, India, and China. More than 1,000 of the overall shopping centers delivered were in the Americas.
The global development pipeline for 2014 stands at 38.3 million square meters, with 1,134 new centers scheduled to open by the end of the year. In terms of GLA in the pipeline, Asia leads the way with 22.0 million sq.m in 2014. Asia will produce more than 53.3 million sq.m of GLA over the next three years, almost five times that of its nearest rival, the United States.
"Asia remains a key growth area for retailers, with established retail markets such as Japan and Australia as well as the world's largest emerging markets." According to James Hawkey, Retail Services Leader for the Asia-Pacific Region, "the new supply of shopping centers in China is very important, and there will be a measure of oversupply in certain markets." "India, Indonesia, and Vietnam are all experiencing tremendous growth."
In 2013, global shopping center investment was relatively strong, and 2014 is off to a strong start, with global retail sales totaling US$37.9 billion in the first quarter. This is a 42 percent increase from the previous year. That growth is largely driven by momentum in the United States and recent developments in India. While heavy investment in Brazil over the last decade has waned, Latin America has seen some positive growth, with Mexico leading the way.
"Asset management and differentiation will be crucial for the future, whether new stock or existing centers," said John Strachan, Global Head of Retail. "In order to compete with more versatile newly-built centers, long-established properties must evaluate their formats." In the age of social media and the opportunity to shop anytime and wherever, whether online, in-store, or a combination of the two, refurbishment, redevelopment, and reinvention will all play a role in their success."