More shopping centres? There’s No More Room in Portugal

21 September 2017

The shopping centre market is saturated. Portugal is full of shopping malls, and there is no more space for new ones. The growth of the population and disposable incomes, together with the increasing dynamism of online commerce, do not justify further investments of millions in this business model. Experts believe that further store openings should be confined to street retail.

Cushman & Wakefield (C&W) and the Portuguese Association of Shopping Centres (APCC) see no room for doubt: the market in Portugal has reached maturity and is saturated. “Once the last two developments that are under construction – Évora and Loulé – have opened, what should follow is, above all, a succession of upgrades to existing shopping centres,” says C&W Research Department head Marta Costa.

“Shopping centres are living organisms, unlike office buildings, which are more static.” They deserve remodelling and definition of policies that allow “adaptation to new technologies,” which is “obligatory,” Ms Costa stated to Expresso.

But it is not just the lack of space that threatens shopping centres. E-commerce has become a major competitor. This is leading owners to “increasingly invest in offerings that cannot be sold online”, such as catering, more leisure spaces and live shows, says the analyst, who gives as an example the shopping centre Colombo – which should have a new tower for offices and additional stores on the lower floors.

Street commerce stores are benefiting from the trend. Ms Costa believes that this scenario “is already happening on the main arteries in Lisbon and Porto, and will expand to other streets and other cities.”

The sector employs 300,000 people has a turnover of €9 billion

According to the APCC, the sector has an annual turnover of around 9 billion euros and employs 300,000 people: 100,000 directly and 200,000 indirectly.

According to C&W analysts, the shopping centre market has received investments of roughly 3.5 billion euros since 2013, equivalent to 30% of total direct commercial real estate investment in Portugal in this period and 64% of the investment made by international operators. “The indirect investment in the sector (through the purchase of units of funds specifically dedicated to the management of shopping centres) is estimated to exceed 1.5 billion euros,” the study said.

Original Story: Idealista

Translation: Richard Turner