Retail Market Insights

February 25, 2022 / By ,

Easing of restrictions bolstered leasing activity

Prior to the outbreak of the Omicron variant in December, governments across the region began to ease COVID-19 restrictions such as social distancing measures and mandatory quarantine requirements. As a result, retail leasing activity generally gained momentum amid a recovery in business sentiment in some markets. Nonetheless, the more contagious Omicron variant presents a downside risk to the operating climate and retailers remain cautious, given the possibility of renewed government-imposed restrictions.

Given the generally difficult operating environment, the aggregate Asia Pacific Retail Rental Index recorded its ninth straight quarter of decline as many of the 19 tracked markets saw another contraction. The pace of decline accelerated during the quarter.

Greater China

On the back of an improvement in local consumption sentiment in Hong Kong, operators in the F&B, grocery, mass market fashion, sports and lifestyle, pop art and experiential retail categories have been the major source of demand. Improvement in market sentiment helped push high street rents to bottom out and rise slightly, while prime malls rents held relatively firm.

Retail leasing remained stable in Shanghai, driven by new energy vehicle (NEV) showrooms, luxury brands, sports apparel and equipment, experiential tenants and coffee and beverage chains. There was also more active expansion from emerging experiential categories such as role-playing escape rooms, cultural and artistic experiences, animal interaction stores and children’s indoor playgrounds. Nonetheless, urban rents dipped marginally on the back of a large wave of new supply completions entering the market.

In Beijing, F&B accounted for more than 40% of newly opened retail space in the quarter, remaining the largest contributor to leasing demand. Themed restaurants actively expanded, taking up large units. Driven by investment funding, Chinese pastry brands also expanded quickly as they grew in popularity among young consumers. Hence, urban rents saw positive growth, though rents in the core area registered a decline.

Overall leasing demand in Guangzhou was modest as most retailers remained cautious about offline expansion. Nonetheless, luxury brands were active in growing their footprint as consumption upgrade continued to steer the recovery of the retail market. Urban rents edged down slightly as the rents of a few malls in Zhujiang New Town faced downward pressure due to rising vacancies.

North Asia

Tokyo recorded several new openings in the quarter, against a backdrop of increased sales and footfall in department stores. Consequently, ground floor rents remained relatively stable in both Ginza and Omotesando. In Seoul, the government’s easing of social distancing measures helped to improve consumer sentiment and retail sales, as some shopping malls welcomed new openings by fashion and F&B tenants. As a result, overall high street rents remained flat, while prime shopping mall rents rose slightly due to retail sales improvement.

Southeast Asia

Leasing activity continued to pick up in Singapore as the high vaccination rate, easing of borders to leisure travel via the Vaccinated Travel Lanes (VTLs) and the government’s roadmap for an endemic COVID-19 lifted retailers’ confidence. Hence, rents in all three main submarkets remained stable or registered a slight upturn amid renewed retailer optimism and expansion.

Bangkok saw the completion of two new projects – the expansion of Central Rama 2 and the renovation of The Mall Lifestore Thapra – both of which saw robust leasing progress with occupancy rates of over 85%. The F&B sector helped support leasing activity in both centres. A decline in incentives helped boost growth in the city’s net effective rents.

In Jakarta, for most of the quarter, malls were allowed to accommodate 100% of their total capacity but were under strict health protocols, including the requirement that visitors were vaccinated. The F&B sector was still the main driver of leasing demand, followed by fast fashion retailers. Rents in prime malls registered a slight uptick in the quarter.

New store openings in Manila were evident in the quarter, especially in newly opened wings or re-opened and renovated spaces. F&B and home appliances and furniture retailers led the tenant mix of new leases, followed closely by beauty and wellness tenants. However, rents contracted as landlords have cut their rentals in an effort to attract tenants and close more deals.


Leasing activity in Mumbai was driven largely by Jio World Drive Mall in BKC, which became operational in the quarter with around 80% occupancy. Brands such as Apple, Steve Madden and Starbucks took up space in the mall. As a result, overall rents registered a slight increase.

Delhi witnessed limited retail leasing activity due to the lack of new supply and low vacancy in high-quality malls. With seasonal festivities and the ease in COVID-19 restrictions, supported by increased vaccination rates, shoppers came back and malls witnessed higher footfalls. Prime malls with strong demand saw stable rents underpinned by increased footfalls and sales recovery.


In Australia, the easing of lockdown restrictions has helped drive a significant rebound in retail spending and boost retail leasing activity, especially from F&B businesses in Sydney and Melbourne. The rental declines recorded for the majority of sub-sectors throughout the year have stabilised in the quarter, with the notable exception of CBD rents continuing to record significant declines.

Retail Outlook

Increasing vaccination rates and 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, the ongoing threat of further potential outbreaks – exacerbated by Omicron and other possible future contagious variants of the virus – still lingers and continues to present downside risks to the outlook.


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