LONDON, Aug 9 (Reuters) - The rate of UK shopping centre construction acti
vity fell to its lowest level since 1995 in the first three months of 2011, with developers delaying project starts over concerns about the health of the global economy, research showed.
Property consultancy CB Richard Ellis said 3 million square feet of shopping centre space was being built in the period to end-March 2011, less than a quarter of the peak of 13 million sq ft in 2007, before the global financial meltdown.
The quarterly figure was the lowest since 1995, when 1.62 million sq ft of malls was under construction in the three months to end-March.
CBRE said it expected pipeline levels to fall to 40 million sq ft, from 58.4 million sq ft, over the next 3-4 years, citing the costs of holding development land and time restrictions that would cause schemes to be cancelled.
Shopping centre developers had been inclined to sit-out the current downturn, CBRE said.
'After the current hiatus in the pipeline, we expect that a flow of new schemes will begin to be delivered to the market from 2015/2016 onwards,' CBRE's shopping centre development and leasing director, Mark Disney, said in a statement.
'Retailer demand is increasingly focused on larger shopping centres, but the lack of new development is limiting opportunities,' Disney said.
The market was now adapting to developers' requirements to see committed income before starting construction, with more retailers agreeing to pre-lets in a bid to help unblock the development pipeline, he said.
In July, Reuters reported deals in the under supplied UK mall sector could hit 4-5 billion pounds ($6.5-8 billion), with investors lured by asset's class comparatively low risk exposure versus the country's struggling high streets. ($1 = 0.613 British Pounds) (Editing by Andrew Macdonald)
(Reporting by Brenda Goh) Keywords: RETAIL CONSTRUCTION/
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