PGIM’s Real Estate expert weigh in on the increased demand for EM real estate

2017-10-03

Increasingly investors are showing more interest in commercial real estate in Asia, South America, and other emerging markets. According to a recent Wall Street Journal (WSJ), retail is an attractive property type in EMs now that growth rates are increasing and structural reforms are underway.

While retail developments in the US has slowed, mall culture is on the rise in EMs. As a result, the WSJ article states that “development pipelines are packed with shopping centers, outlet malls, and other retail properties.” Countries like China, Indonesia, and Columbia, are experiencing numerous ongoing development projects for outlet malls, and have more in the pipeline.

Although e-commerce is gathering steam in emerging markets, developers are enhancing the experiences at outlets. For example, “some shopping center developers are adopting strategies that are becoming more popular in the US and Europe that combine bricks and clicks and focus shopping centers more on experiences, such as dining out, that consumers can’t do on the internet.”

As Alfonso Munk, managing director of PGIM Real Estate, states “we’re focused on retail that has leapfrogged [traditional mall] development.” As EMs continue to experience a rise in middle-class spending and increased household wealth, the demand for shopping centers, outlet malls, and other retail properties will continue to expand. 

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