Retail Market Insights

May 31, 2022 / By ,

Continued loosening of restrictions lifted sentiment – with the exception of Greater China

Despite the outbreak of the Omicron variant in end-2021 and early 2022, governments across much of Asia Pacific continued to ease COVID restrictions such as social distancing measures, mandatory quarantine requirements and travel restrictions. As a result, business sentiment picked up and retail leasing activity generally gained momentum over the quarter. However, sentiment in some Greater China markets was subdued as a result of new COVID-19 outbreaks, a strict adherence to a zero-COVID-19 policy, and sweeping accompanying restrictions. Despite improved leasing activity, the operating environment generally remains difficult, and the aggregate Asia Pacific Retail Rental Index recorded its tenth straight quarter of decline. However, the pace of decline slowed during the quarter.

Greater China

The leasing market in Hong Kong was relatively quiet, largely due to the Omicron outbreak. Some retailers decided to close their shops during the quarter, though a handful committed to new outlets on the back of more affordable rents. As a result, prime shopping centre rents dropped, as footfalls fell considerably due to the tightened social distancing measures.

In Shanghai, leasing activity remained stable in the first two months of 2022; however, activity moderated in March due to a new COVID-19 outbreak along with accompanying epidemic mitigation measures. New take-up was mainly contributed by coffee, tea, and dessert shops, along with new energy vehicle showrooms, international skin care and perfume brands, and designer fashion brands. Amid the COVID disruptions, prime rental growth slowed down but remained positive, supported by leasing deals confirmed at the end of 2021.

In Beijing, scattered COVID-19 cases and strict restrictions also slowed down the recovery of leasing demand. Nonetheless, businesses that were active included gastropubs, which were expanding after receiving investment capital, and domestic gold jewellery retailers, which showed strong performance after reporting robust sales growth, accounting for over 8% of total opened stores in the quarter. Core rents in Beijing further rose, driven by top destination malls.

Overall leasing demand in Guangzhou remained tepid as many fashion & accessories retailers were wary about future offline sales. Only a few domestic sportswear brands gained traction to expand. Bubble tea and coffee brands, Chinese fast-food chains and novel Chinese pastry retailers also continued to set up new stores. Urban rents dropped marginally as many landlords had to lower the rents due to mounting vacancy pressure, although landlords of a few mid-to-high-end malls in Tianhe North were able to hold their rents firm.

North Asia

New opening demand in Tokyo’s prime high streets was robust on the back of healthy luxury sales, and notable transactions included Adidas opening a flagship store. Consequently, ground floor rents remained stable in both Ginza and Omotesando.

In Seoul, while leasing activity in Myeongdong and Hongdae high streets stayed quiet as tourist volumes remained low, demand in prime shopping malls continued to be upbeat driven by F&B tenants. High street rents dipped slightly due to fragile market conditions, while shopping mall rents were up on the back of improving occupancies.

Southeast Asia

Leasing activity remained healthy in Singapore’s Prime submarket in tandem with the uptrend in international visitor arrivals via the Vaccinated Travel Lanes, lifting retailers’ confidence, while the Secondary and Suburban submarkets saw the consolidation and closure of large occupiers. Rents continued to edge up as the government’s firm stance to move towards an endemic COVID-19 gave retailers and landlords a boost in business confidence.

Recently opened projects in Bangkok have experienced slow take-up amidst the economic uncertainty. Nevertheless, at least 25 brands have opened new branches, and two of these have opened a flagship in the city. F&B and fashion retailers took up the majority share of newly occupied space. Despite no further lockdowns in the quarter, the slow economic recovery and poor consumer confidence has limited rental growth.

Jakarta’s prime malls continued to adjust tenant mixes to accommodate more attractive occupier types. Restaurants and family-friendly entertainment facilities continued expanding, as children’s playgrounds were allowed to operate at 70% capacity. Home appliance brands also expanded. While a lack of new retail supply and sustained low vacancy rates have historically supported moderate rental growth, average rents in the quarter remained flat.

In Manila, pull-outs, termination of leases, and lack of new supply led to negative absorption in the quarter. General retail, F&B and footwear brands drove the majority of the pull-outs, while new leases were likewise also led by the general retail and F&B segments. Despite the market weakness, retail rents remained stable during the quarter.


Mumbai’s shopping malls saw healthy leasing activity due to a couple of prominent malls becoming operational over the last few quarters. Pantaloons, Reliance Trends, Max were some of the major brands that took space in the newly completed Capital Mall. Overall rents remained stable in the quarter. Mall footfalls in Delhi were down initially in January with a fresh wave of COVID-19 restrictions, but recovered quite rapidly in February and March. Leasing activity was dominated by the F&B segment. Rents remained stable across all malls.


In Sydney and Melbourne, leasing demand remained soft, with demand from F&B retailers relatively resilient, whilst demand in the fashion category, particularly midmarket fashion retailers, continued to subside possibly due to the accelerated growth of e-commerce. The rental declines recorded for the majority of sub-sectors in Australia throughout 2021 have moderated, with the notable exception of CBD rents continuing to record significant declines.

Retail Outlook

As more countries shift toward living with endemic COVID-19, increasing vaccination rates and continued easing of pandemic restrictions should help aid in market recovery, which in turn should lend support to greater leasing activity as retailer sentiment improves. Relaxations of cross-border travel restrictions should also help boost international travel and tourism, further fuelling the retail recovery around the region. Nonetheless, COVID-19 lockdowns in China, along with the Russia-Ukraine conflict, may exacerbate supply chain disruptions and inflationary pressures, posing a downside risk to the region.




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