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Shopping centres hit by consumer downturn

Shopping centre developments are being put on hold after schemes were hit by funding crisis, according to the Financial Times.

Property consultancy Savills told the newspaper that about 40% of currently planned shopping centre space would be abandoned or delayed over the next five years.

Schemes including developments in Dumfries in Scotland, Chester in Cheshire and Newport, south Wales, have recently been put on hold and were estimated to be worth almost £600 million. This follows a boom in developments including Liverpool One and Westfield London, which are both due to open this year.

Savills director of retail development Paul Wright said: "Shopping centre space in the pipeline is estimated at between 50 million and 80 million sq ft over the next five to seven years. We believe that in the current climate only the strongest schemes with secure funding will be realised, which means we estimate that no more than 60% of those schemes will proceed in their current form."

The Financial Times said finding financing had become more difficult due to the shortage of bank debt and a sharp drop in the projected end value of completed schemes. Developers are also worried about demand, with retailers becoming more picky about where they open stores and demanding greater incentives.

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