China once again registered the globe’s highest annual completions of retail shopping centers in 2016, according to a recent CBRE report. The country is the most active market across the globe for construction and shopping mall development, despite fears of oversupply.
The report, which explored the world’s most active shopping center markets of the past year, revealed eight Chinese cities made the top 10 list of market developments currently under construction globally, with Shenzhen and Shanghai together accounting for 40 percent of China’s pipeline. The entirety of the top 10 list for global shopping center construction as of December 2016 was based in the Asia Pacific market, with Bangkok and Kuala Lumpur coming in at the sixth and seventh spots retrospectively, behind China’s Shenzhen, Shanghai, Chongqing, Chengdu, and Wuhan, and slightly above the Shenyang, Beijing, and Tianjin markets.
The Asia Pacific market alone accounts for 79 percent of the retail space under construction globally, despite worldwide shrinkage in retail investment causing the Asia Pacific market to drop 24 percent in 2016. Asia Pacific construction totaled 26.6 million square meters, with China accounting for 19.7 million square meters of this amount—and nearly 60 percent of the global total.
However, the marked slowing of spaces under construction across the Asia Pacific as a whole suggests an ever increasing risk of oversupply in the Chinese market, with investors growing worried about competition from online retail growth, and causing shopping centers to shift towards other forms of entertainment in order to draw shoppers to stores. Despite this concern, Senior Director at CBRE Asia Joel Stephen remains optimistic off the back of the results of the report. ‘The Chinese retail market is beginning to show signs of recovery, with leasing demands stabilizing, despite oversupply concerns,” he said.
The report also showed findings of the top markets for shopping center completions in 2016, in which China accounted for seven cities on the top 10 list, with Shanghai leading the pack with a whopping 1.1 million square meters of shopping center completions last year—a feat that might seem somewhat expected to the city's residents.
Retail completions in Beijing came at a not too distant second place, with 801,540 square meters of development. Mexico City made third on the list, as the only market from the Americas to place on both the top center completions and development rankings. With retail construction also decreasing in Russia and Ukraine, Chinese cities Chongqing, Chengdu, Nanjing, Shenzhen, and Tianjin all helped to make up the total of seven Chinese cities on the list.
As retail investors globally maintain a cautious outlook amid economic and political uncertainty, it seems the Chinese market has continued to power ahead with vast development in the industry, and in the process, continue to draw the attention of international luxury brands.