MAPIC: Russia has overtaken the UK as Europe’s second-largest shopping centre market, according to Cushman & Wakefield’s European shopping centre development report.
Second only to France, which recorded 176m sq ft of shopping centre space at H1 2014, Russia now moves from third position into second, ahead of the UK with 175 m sq ft of space added to the market.
The UK slipped to third place during the first half of this year with 169m sq ft of mall space.
The agent said economic growth and urbanisation had been the main driver of development this year, as developers saw potential in densely populated regions with a lack of high-quality schemes. It said that Central and Eastern Europe, fuelled by frenetic development activity in Russia and Turkey, would account for 81% of shopping centre space added to the market by the end of 2014.
Total shopping centre floor space in Europe is estimated to rise by 4.5% over the year to reach 1,614m sq ft. Central and Eastern Europe development reached 14m sq ft in H1 2014, more than double the 6.4m sq ft added to the Western European market.
Russia and Turkey alone accounted for 11m sq ft of added space in H1, as developers aimed to catch up with the Western European market.
A further 45.7m sq ft in the development pipeline is expected to be delivered to the Russian market between H2 2014 and 2015, which could see the country overtake France as Europe’s largest market.
Some 53 new malls were opened in Europe in the first half of 2014, a dozen of which were in Russia. A further 49 are scheduled to be completed before the end of 2015.
Maxim Karbasnikoff, head of retail services in Russia for Cushman & Wakefield, said: “Russia is now the largest consumer market in Europe but until very recently supply was not meeting demand. Strong development activity witnessed in Russia since 2010 has led to a very large pipeline now being delivered.
“However, political uncertainty, steady depreciation of the rouble and stagnating consumer demand is pressurising retailers. Nevertheless, fundamentals are still positive in the mid-term and we expect vacancy to stablise and rents to reach a healthier level in the coming six months.”
