The development would add about 60 new retailers, including Farmers and three smaller but significant retailers. The balance would be made up of specialty stores.
Forsyth Barr broker Lyn Howe said Kiwi Property was expecting to generate an initial yield of 5.7% on total project costs of $223million and development profit of $20million.
The project would expand what was already New Zealand's largest mall to more than 90,000sq m and was coming on the back of other recent developments.
``While it is pleasing to see the project committed, we view it as largely valuation-neutral and maintain our neutral rating.''
A project on the scale of the Galleria came with significant risks, largely centred on project leasing and the potential trading dilution of existing stores, Ms Howe said,
Kiwi Property continued to be strategic in remixing its retail offerings to combat higher competition.
Among the risks for retail exposure was the rise of e-commerce. Competitive pressures from e-commerce were a growing problem for retail properties. Repositioning malls and increased remixing of specialty tenants would result in higher capital expenditure.
Higher interest rates could make other investment yields more attractive than listed property dividend yields, Ms Howe said.
The Galleria expansion came after two other shopping centre developments were committed to in recent weeks - Botany Town Centre and Westfield Newmarket.
The activity highlighted retail property landlords were focused on both lifting their offering and remixing tenants to defence categories, such as food and beverage and entertainment, in the face of competition from e-commerce.
The closing of the Westfield Newmarket for redevelopment was positive for Kiwi Property in the short-term but would increase competition in the medium term, particularly for high-value customers who lived in central Auckland suburbs.
Kiwi Property would release its 2018 financial result in May.
