Russia Tops Ranking Of New Shopping Centres

13 Mar, 2006, Moscow

As Europe is due to see more than 8 million square metres of new shopping centre space in 2006

Europe can expect to see the opening of more than 8.3 million square metres of new shopping centre space this year, according to the world's largest privately held real estate services firm, Cushman & Wakefield.

This annual increase is the biggest in terms of total new space since C&W first started monitoring shopping centre development in Europe in 1960. It represents a 9 per cent annual increase in shopping centre space in Europe when compared with 2004 levels.

John Strachan, C&W's London-based Global Head of Retail, comments: "We are not only seeing growth in the emerging markets towards the eastern fringes of Europe, but also in the more mature retail markets of Europe where developers are seeking to offer retailers and consumers better quality retail space and greater choice."

For 2007, Cushman & Wakefield estimates that a further 7.2 million square metres of new shopping centre space will hit the 35 country markets monitored in Europe. Over the two years of 2006 and 2007, this brings the total new space (measured in terms of gross lettable area and including new schemes and extensions of existing schemes) to 15.5 million square metres.

On a country ranking, Russia is due to see the most amount of new shopping centre space, with nearly 1.9 million square metres of new, prime-quality shopping centre space due to open in the two years till December 2007.

Charles Slater, Deputy Head of Retail of Cushman & Wakefield Stiles & Riabokobylko (C&W/S&R), C&W's Russian office, says: "Retail is one of the most dynamic sectors of the Russian economy, stimulated by the country's strong economic growth, set to reach more than 6 per cent this year, and the development of consumer lending."

Charles Slater continues: "Most shopping centre development in Russia to date has occurred in the north-west and south-west suburbs of Moscow, as well as central Moscow. With fewer sites available, developers have turned towards eastern Moscow, where half of this year's new shopping centre space in Moscow is due to open this year, more than 370,000 sq m. But more significantly developers are turning towards the Russian regions, where 13 cities have a population of more than one million people."

Swedish retailer IKEA is one of the country's key developers of shopping centres. It opened its first regional shopping centre in Kazan in December 2005, and this year it is set to open a total of around 700,000 sq m of new space with the opening of two MEGA malls in St Petersburg, and one each in Ekaterinburg, Nizhniy Novgorod and Belaya Dacha in Moscow.

Of the emerging Central and Eastern European markets, Poland is also showing strong growth in shopping centre space. As Piotr Kaszynski, C&W's Head of Retail in Poland, explains: "Most new shopping centre development in Poland is located outside Warsaw, in Poland's eight largest cities, all with populations of more than 400,000. Current schemes due to open this year and next include Forum in Gliwice, Manufaktura in Lodz, Galeria Krakowska in Cracow, Arkady Wroclawskie in Wroclaw and Galeria Malta in Poznan. Development activity is also growing in the group of smaller cities with populations of 100,000-400,000 inhabitants.

In turn, this development has spurred the investment market in Poland. Piotr continues: "The number of schemes coming onto the market, and the quality of these schemes, has created more investment opportunities across Poland. As a result, the Polish retail investment market proved to be the strongest commercial property sector in 2005; around 40 retail assets changed ownership in 20 transactions worth a total 1.92bn euros - a record for the Polish retail market. Looking ahead to 2006 and 2007, we expect similar levels of activity."

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