The penchant for international retail expansion has left retailers, developers and investors with a difficult task—deciding where exactly to put down those new stakes.

Retail expansion is continuing to saturate developed nations and established retail hubs ranging from New York and London to Hong Kong and Sydney. As those top cities become increasingly crowded, retailers and developers are looking to unlock the potential growth opportunities that exist in developing countries.

Continued struggles in Europe and the slowing growth in other mature markets, such as the U.S., is driving globalization of retail. “There is an international imperative whereby retailers need to look at new markets to grow their business, because there simply isn’t the growth potential in their home market,” says Neville Moss, director and head of EMEA Retail Research at CBRE in London.

The BRIC countries of Brazil, Russia, India and China are high on the short list of today’s hot spots. Statistics alone create a compelling argument to locate in these countries. The BRIC countries represent the fastest growing and largest emerging markets in the world. These four countries alone are home to almost 3 billion people—nearly half the population of the entire world.

International retailers have targeted tier one cities in China, such as Shanghai and Beijing. India also has seen considerable interest among international retailers. That stock could rise further over the next five to 10 years, especially if India is able to remove one of its main barriers to entry. To date, restrictions on foreign direct investment have deterred international retail expansion in India, notes Moss.

BRIC countries also offer another powerful incentive—a growing middle class that will continue to drive rising consumer spending in the coming years. Brazil, for example, is the seventh largest economy in the world with a GDP of approximately (U.S.) $2.1 trillion and a population of about 190 million people. Although there are some concerns that Brazil’s growth is slowing, the country has seen high economic growth over recent years as well as a substantial increase in its middle class population. Over 110 million people in Brazil are now considered to be middle class or above.

Emerging markets to watch

As retailers continue to step up expansion efforts, the focus is on not only identifying the emerging markets that will make good expansion targets in the near-term, but what markets will hold potential 10 and 15 years down the road.

Over the next five years, retail sales in Asia-Pacific are expected to expand and outperform the rest of the world, according to the Asia Pacific Quarterly Outlook published in second quarter by Prudential Real Estate Investors (PREI). China is leading the pack, followed by Thailand and Indonesia. PREI is projecting that prime retail rents will grow across Asia-Pacific in the next few years with Beijing, Shanghai, Jakarta and Hong Kong representing the top performers.

Even though Brazil has grabbed the spotlight in South America, retailers are keeping an eye on emerging opportunities throughout the region. “South America and possibly Central America are well positioned for good growth because consumer expenditure growth is quite high in both regions,” says Moss. “There will be a lot of retailers looking to open stores in Latin America, which could include Argentina, Mexico and Columbia, as well as Brazil.”

PREI cited the tight labor markets in Brazil and Chile for helping to keep consumer confidence high despite an overall moderation in economic activity. Brazil’s GDP, for example, has been experiencing a steady decline over the past two years with an annual rate of 1.4 percent GDP growth that was recorded in the fourth quarter of 2011. However, retail sales growth has cooled from the double-digit increases of early 2011, according to PREI. Sales are expected to further moderate this year as a result of a slowdown in job creation and wage growth.

Retailers also are beginning to exhibit interest in Africa in places such as Morocco where the new Morocco Mall opened in late 2011 in Casablanca. “I think that will create a lot of interest from international retailers,” says Moss. “That activity may lead into other African markets as well, but it is still difficult to predict which ones they might be at the moment,” he adds.

Countries that make an investment in improving the infrastructure are bound to capture more of those retail dollars. The Ukraine, for example, has benefited from the new infrastructure that has been put in place as the city prepares to co-host the Euro 2012 Football Championships this summer. Both the Ukraine and co-host Poland have made efforts to improve roads and freeways and modernize railways.

Ultimately, retailers, developers and investors are weighing their options carefully as new emerging markets continue to evolve. “If expenditure numbers are high and growth is high, that automatically gets retailer’s interest,” adds Moss.

The next markets that investors may want to target will be the subject the Future Growth Trends: Emerging Markets panel at the ICSC Retail Real Estate World Summit.