KUALA LUMPUR: Up to 7 million sq metres of planned shopping centre development in Europe has been put on hold or cancelled as a result of the global credit crunch, said global real estate adviser Cushman & Wakefield.

“The downturn in the development market is mainly due to the difficulty in securing finance for schemes.  This is exacerbated by many retailers being cautious in their expansion plans and therefore, reluctant to commit to new shopping centres," said Boris van Haare Heijmeijer, European retail partner, Cushman & Wakefield in a press release on April 16.

“It is a real pity that some very promising schemes are being put on hold for these reasons but we can be sure that the best of these will ultimately be developed once economic conditions are more favourable,” he added.

The slowest rate of expansion since 2005 is now seen with around 10 million sq m of new shopping centre space expected to open across Europe in 2009, 40% less than what had been forecasted earlier in July 2008, according to Cushman & Wakefield’s latest report zooming into new European shopping centre development.

In addition, forecast for 2010 has dropped 30% fromt he forecast made last year as only 7 million sq m of new spaces are expected to open among the shopping centres. This would bring an end to five consecutive years of growth in shopping centre development.

The report found that 2008 was a record year for shopping centre openings in Europe, with over 9 million sq m of new shopping centre space opening in 310 schemes- Russia led the way with 1.65 million sq m of new space, a 23% increase in total shopping centre provision, followed by Turkey, the UK, Spain and Romania.  

The weaker consumer sentiment, tougher financing requirements, and reduced developer confidence resulting from both the financial crisis and global recession will notably impact in particular, emerging markets like Russia, Ukraine, and to a lesser extent Turkey.

These three countries which used to account for 58% out of the total development pipeline in Europe a year ago has now fallen to just 22%. Nevertheless, Turkey now has the largest development pipeline of new shopping centres in Europe, with over 2 million sq m due to open by the end of 2010.  

However, more schemes are expected to experience termination in the near future for Turkey and other European countries listed in the survey due to the rapid deterioration of the economy.

Head of retail in Cushman & Wakefield Turkey Gülsin Hakman said Turkey’s population of over 75 million and the relative under-supply of modern shopping provision makes it an attractive market for retailers.

Alexander Colpaert, a consultant in Cushman & Wakefield’s European research group noted: “The slowdown in  development activity is not necessarily a negative trend for many of the emerging countries in Europe as some areas, particularly the capital cites, have seen an enormous amount of shopping centre space added in a very short period of time.

“This environment therefore gives developers, retailers and local governments ample time to assess the current situation, for example, to examine how well-provided certain cities are and the impact of further large scale schemes on the current retail landscape.”