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11 Biggest Malls in the World: Will Higher Interest Rates Bankrupt The Industry?

In this article, we take a look at the 11 biggest Malls in the world. You can skip our detailed analysis of the state of the mall industry amid rising interest rates and go directly to the 5 Biggest Malls in the World.

Mall Industry Outlook

Malls are all about physical shopping in a building where you can find most retail stores and restaurants. The global mall market share was worth $5 trillion as of 2021 and is expected to grow at a CAGR of 5.9% during the period of 2022-2028 according to Grand View Research. The North American region has the highest share of the market at over 46%.

Speaking of regions, the mall industry in Asia-Pacific region is projected to grow the fastest, at 6.7% CAGR for 2022-2028, presumably because of the growing middle class in India and China driving up consumer demand. 

Fast Moving Consumer Goods account for more than half of the malls’ global market size. When it comes to product-line market growth, the Apparels and Accessories segment is forecast to grow the fastest during 2022-2028, at a CAGR of 6.6%.

However, as global mall trends show a rise in general, malls are on the decline in the US due to many factors, e-commerce being the oft-cited one.

Further, according to a report by Coresight Research, 25% of the malls in the country would shut down most likely in the next five years amid persistent stagflation.

Impact of Rate Hikes on Retail Real Estate

As the pre-Covid trends are making a comeback now that the pandemic is effectively over, the conventional wisdom would suggest that consumers would be returning to malls at pre-pandemic rate.

However, as persistent inflation has led many central banks around the world to consecutively raise interest rates to bring it down, it has made it harder for consumers to save enough in their disposable income to sustain pre-pandemic shopping habits.

Falling demand for retail items notwithstanding, in 2020, a large number of marginal tenants borrowed heavily to bolster their cash reserves in order to navigate the pandemic downturn. Retail companies accounted for $145 billion of the $252 billion withdrawn on revolving credit facilities. A large portion of this debt was short-term or variable rate debt (under 5 years). 

As a result, many retailers will probably have to pay more in interest over the next few years, which may limit their capacity to open more locations or make other investments in their existing businesses. This, combined with reduced spending by consumers, could deal a devastating blow to the industry’s balance sheets according to Citi analyst Paul Lejuez. 

Bankruptcies are uncommon when it comes to REITs in general but the risk to mall-owning REITs is relatively high. Two Mall REITs — CBL & Associates and Pennsylvania Real Estate Investment Trust — filed for bankruptcy in 2020 due to the Covid-related retail apocalypse, caused by lack of consumer demand. This time around, rising interest rates are leading to both the fall in demand, as well as harder retail debt-servicing. Despite experiencing increased cash flow and raising their dividends in 2022, REITs are down today by an average of 33%, and several individual REITs are down by more than 50%.

It consequently has resulted in anxiety for mall-REITs. Some are already trying to adapt. The biggest US mall owner, Simon Property Group, has been reported to be negotiating with Amazon.com, Inc. (NASDAQ:AMZN) to turn the space of closed Sears and J.C. Penney stores into fulfillment centers, regardless of the operational, legal and bureaucratic difficulties associated with rezoning buildings. 

No matter how attractive the malls are, people are increasingly turning to online shopping. The retail companies that are well-adapted are seeing their earnings grow online. For instance, the online sales of Walmart Inc. (NYSE:WMT) grew by 16% in the Q3 of its on-going fiscal year.

11 Biggest Malls in the World: Will Higher Interest Rates Bankrupt The Industry?
11 Biggest Malls in the World: Will Higher Interest Rates Bankrupt The Industry?

Photo by WeLoveBarcelona.de on Unsplash

Our Methodology

For our list of the 11 biggest malls in the world, we’d be ranking them based on the gross leasable area. We’d also be mentioning the number of stores as well as anchor tenants in these malls. Lastly, we’d be discussing ownership in these malls. We'd be getting the data from the malls' websites.

With that said, let’s move down to the 11 biggest malls in the world.

11. Mall of America

Gross Leasable Area: 5.6 million sq feet

Mall of America is the largest mall in the United States. It is located in Bloomington, Minnesota. The shopping center has a retail space of 5.6 million square feet as of 2020. It has 520 retail stores, 50 restaurants, an aquarium and a theme park. Some of its prominent anchor tenants include Macy’s, Inc. (NYSE:M), IKEA and Nordstrom, Inc. (NYSE:JWN). 

Simon Property Group held 50% ownership in Mall of America until it was found in violation of fiduciary duty to its partner, Triple Five, which led to the District Court of Minneapolis to order SPG to sell 27.5% stake to Triple Five, giving them control. The mall attracts roughly 40 million people annually, 80% of which are usually from Minnesota.

Most of the retail products available on their platform are also available online at Amazon.com, Inc. (NASDAQ:AMZN) and Walmart Inc. (NYSE:WMT).

10. ICONSIAM

Gross Leasable Area: 5.6 million sq feet

ICONSIAM is located in Bangkok, Thailand, near the Chao Phraya River. Apart from hotels and residences, the building has one of the largest malls in Asia whose gross leasable area spans 5.65 million square feet. Among its anchor tenants, it has Apple Inc. (NASDAQ:AAPL)’s Apple Store and the Japanese multinational Takashimaya Company, Limited (TOKYO:8233.T).

The mall was unveiled back in 2018 and has over 550 retail stores. Other tenants include Lotus’s and an art museum. ICONSIAM was ranked among the four best shopping malls around the world in the MIPIM 2021 award event at Cannes, France. 

ICONSIAM is jointly owned by Siam Piwat, the developer of Siam Paragon, MQDC Magnolia Quality Development Corporation and Charoen Pokphand Group. The total investment amounts to $1.5 billion.

9. Central World

Gross Leasable Area: 5.9 million sq feet

Central World is another shopping mall from Bangkok, Thailand. With a total retail space of 5.9 million square feet, it grabs the ninth spot on the list of biggest malls in the world. It is owned by the Crown Property Bureau, a Thailand governmental body. 

Central World has 600 retail stores. Its anchor tenants include Apple Store of Apple Inc. (NASDAQ:AAPL), Toys ‘R’ Us, owned, in part, by Vornado Realty Trust (NYSE:VNO) and SuperSports. 

The plaza also has a cinema from SF Cinema Group, with 15 screens and 800 seats. Additionally, there’s five-star Centara Grand & Bangkok Convention Centre at CentralWorld.

8. Central Plaza WestGate

Gross Leasable Area: 5.9 million sq feet

Central Plaza WestGate is yet another Thai shopping mall located in Bang Yai District and with 5.92 million square feet, it is the eighth biggest shopping mall in the world. It has over 650 retail stores. One of its anchor tenants, IKEA, alone has a floor area of nearly 550,000 square feet. 

Its other anchor tenants include PowerBuy, OfficeMate, SuperSports, Tops superstore, Uniqlo by Fast Retailing Co., Ltd. (OTCMKTS:FRCOY) and H&M. Central WestGate is owned by Thailand’s largest retail real estate investment company, Central Pattana Public Company Limited (BKK:CPN). The company presently runs 36 shopping centers across Thailand with a total retail space of 20 million square feet.

7. Golden Resources Mall

Gross Leasable Area: 6 million sq feet

Golden Resources Mall, also known as Jin Yuan, is one of the biggest shopping malls in China. It is located close to the Fourth Ring Road in Haidian District, Beijing. The mall has more than 750 retail stores and boasts six major anchor tenants. Other than that, there’s 20 mid-tenants, 600 apparel shops, 100 restaurants, 10 entertainment venues and a five-floor connected parking structure with 6800 parking spaces.

6. SM Mall of Asia

Gross Leasable Area: 6.3 million sq feet

SM Mall of Asia is the largest mall in the Philippines and the sixth biggest in the world. It is located in Bay City, Pasay. It was developed and is owned by SM Prime Holdings, the biggest mall owner in the Philippines.  The mall has over 3,500 retail stores. It also features Power Mac Center, the premium reseller of Apple Inc. (NASDAQ:AAPL) products.

There’s also a 0.5 million square feet area reserved for social gatherings, which garners a daily mean foot traffic of about 0.2 million people. One of the most prominent attractions in the mall is the first ever IMAX theater in the Philippines. SM Mall of Asia has 16 anchor tenants and 217 fine-dining restaurants. It is a huge complex and has a variety of retail products available but it's dwarfed by the online retail scale of Amazon.com, Inc. (NASDAQ:AMZN) and Walmart Inc. (NYSE:WMT).

Click to continue reading and see the 5 Biggest Malls in the World.   Suggested articles:

Disclosure: none. 11 Biggest Malls in the World: Will Higher Interest Rates Bankrupt The Industry? is originally published on Insider Monkey.