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Shopping Centers Today -> November 1999
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Asia-Pacific Convention 1999
Looking East
By Mac Keliher
Asia-Pacific Convention 1999
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For shopping center developers, Asia can be seen as both a continent of opportunity — and of overbuilding.
In an overview of Asia presented at ICSC's seventh Asia-Pacific Convention, held in early September in Taipei, various representatives discussed plans for projects around the region.
Some of those plans undoubtedly have changed in light of the 7.6 magnitude Taiwan earthquake that ravaged parts of the island on Sept. 21. Taipei, however, was only minimally damaged, and construction plans described at the show remain in effect at press time.
Natural catastrophes aside, experts advise caution regarding shopping center development in Asia. The 1998 financial crisis handed out hard lessons in shopping mall overdevelopment and, although the issue of mall overbuilding has begun to set itself straight, well-grounded regional planning is still lacking.
Developers outlined their projects in the region during a session called " Taiwan: The Future Is Here." |
Even before the economic crisis, as far back as the early 1990s, many Asian cities such as Singapore and Hong Kong were showing signs of overbuilding. At the time, economic indicators in many Asian countries reached double-digit growth. The explosion gave local populations buying power and led to a surge in consumer confidence and spending.
Furthermore, excessive liquidity — the flow of cheap funds and investors eager to finance real estate — contributed to a rush of regional development. North American-style shopping centers were developed, replacing traditional shopping strips.
"The problem compounded on itself. Economic success led to an explosion in consumer spending, which in turn led to high rents and more shopping centers," said Edmund Tie, executive chairman and CEO of international property consultancy Edmund Tie & Co., Singapore, at the convention.
Today, Asia is overmalled. Prime space rents are down by as much as 50% to 70% from their peak, and occupancy has dropped as low as 50% to 65% in cities such as Bangkok and Jakarta, Tie said.
As a result, developers are turning away from further development toward new strategies, including nontraditional anchors and reuse of existing facilities. New renovation plans from Japan to Singapore are concentrating on providing one-stop shopping with amenities beyond retailing and entertainment, such as foot massage and postal services.
A link to transportation also is much more important in Asia than in North America. The typical Asian consumer lives in the city and uses mass-transit systems to get around. (See related story, page 51.) Furthermore, experts have noted that people like to shop in areas within their sphere of travel usually between home and work. The solution has been to turn mass-transit stations into anchors and offer services besides retailing.
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"It is devastating to pick up a U.S. mall and plop it in Asia… there needs to be a cohesion of four factors: demographics, infrastructure, socioculture, and economics." —
Stan Eichelbaum, SCMD, |
Malls connected to the Japanese subway system, for example, offer quick massages and facials.
To accommodate a dense population concentrated into small amounts of land, Asian shopping centers must be part of mixed-use developments incorporating such activities as securities trading, analysts believe.
The cost of development also is a factor in determining how much retail can be built. For example, prior to the earthquake, land costs in Taiwan had been high and were continuing to skyrocket. Local developers have been quick to use their land by putting up high-rise apartment and office complexes, enabling them to capitalize immediately. This has, in effect, limited the available space to build and eliminated potential mall projects.
Furthermore, zoning regulations have restricted new mall development. Up until recently, the government would not rezone land for shopping center development.
"It is devastating to pick up a U.S. mall and plop it in Asia. Culture is very important and there needs to be a cohesion of four factors: demographics, infrastructure, socioculture and economics," said Eichelbaum.
As of press time in late September, the situation in Taiwan was still uncertain. But at least one individual remained confident that it will bounce back.
"Taiwan has been one of the most industrious progressive countries in the world and is moving into the forefront of the shopping center industry. Certainly, the earthquake is a sad, unfortunate happening. But Taiwan is a market with the resilience and abilities to recover and move ahead quickly," Eichelbaum said.
Developers outlined their projects in the region during a session called "Taiwan: The Future Is Here."
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