Retail Market Insights

December 1, 2021 / By ,

Delta-related disruption contributes to headwinds

Varying levels of government-imposed COVID-19 restrictions across the region have contributed to mixed performance in retail leasing activity. Such restrictions, including social distancing measures and mandatory quarantine requirements, coupled with limited international tourism arrivals have combined to weaken business sentiment in some markets. On the other hand, a loosening of restrictions have aided market recovery in some other markets.

Given the generally difficult operating environment, the aggregate Asia Pacific Retail Rental Index recorded its eighth straight quarter of decline as many of the 19 tracked markets saw another contraction. Nonetheless, the pace of decline showed signs of bottoming out.

Greater China

As overall market sentiment in Hong Kong continued to improve with COVID-19 under control, leasing demand amongst high-quality prime shopping centres improved. Leasing momentum also continued for high street shops as landlords softened their stance further and tenants were able to take up prime spots at a fraction of peak rents. Overall, while high street rents continued to decline though at a more moderated pace, rents in core areas such as Central and Causeway Bay recorded positive growth.

Luxury brands in Shanghai accelerated their expansion with a focus on flagship stores, new concept stores, and pop-up stores. Auto showrooms, experiential indoor sports, chain restaurants, and coffee and dessert shops also drove improvement in leasing momentum during the quarter. This helped support overall rent growth in the city.

Along with furniture brands, entertainment retailers such as KTV operators and murder mystery and escape room retailers were also active in Beijing during the quarter. Hence, urban rent declines further slowed, while core rents remained stable with some top performers even recording positive growth.

Although leasing demand in Guangzhou was modest during the quarter, retail sales growth was supported by consumption upgrade. Several retailers focused on their flagship stores in core areas and devoted to creating unique offline experiences. Generally, urban rents remained stable while suburban rents decreased as the rents of malls in Panyu and Zengcheng still lacked growth momentum.

North Asia

Demand for prime ground-floor retail space in Tokyo continued to come from international brands with landlords increasing flexibility. Hence rents for prime ground-floor space stabilised, though rents declined for upper floor space.

In Seoul, the government’s heightened social distancing measures took a toll on retail activity, especially pressuring major high streets. On the other hand, mall performance was more resilient. As a result, high street rents continued to marginally contract amid elevated vacancy, while prime shopping mall rents saw rental upticks driven by improvement in retail footfalls and sales.

Southeast Asia

In Singapore, the repeated tightening and easing of COVID-related measures created uncertainty and disrupted businesses, causing retailers to remain cautious. Nonetheless, rents generally stabilised in the quarter, following a period of quarterly declines. Growing business optimism from rising vaccination rates and a roadmap to living with COVID-19, detailing the progressive reopening of the economy, as outlined by the government, supported rents.

While lockdowns in Bangkok led to negative net absorption in the market, there was still some movement among some brands. At least 12 brands had opened new branches and two brands had also expanded their stores in existing centres. F&B and household tenants took the majority of newly occupied space. Overall rents declined during the quarter.

New tenants, driven mainly by F&B tenants, opened their stores as soon as malls reopened in Jakarta. Since mid-August, malls have been allowed to reopen and operate at 50% capacity, with specific age requirements and only for fully vaccinated people. Rents in prime malls remained stable in the quarter.

Manila recorded positive net absorption in the quarter, backed by modest size store openings ranging from 60 sqm to 100 sqm. These mainly came from local and foreign F&B stores, along with local stores offering services. While overall rents remained steady, some mall operators lowered their asking rents in 2021 compared to 2020 due to high vacancy rates.


The Mumbai retail market recorded a significant jump in net absorption as malls reopened for shoppers, especially as healthy leasing activity was recorded in the quarter’s newly completed projects. The new mall completions in the quarter also led to a slight increase in overall rents.

In Delhi, with the easing of COVID-19 restrictions and increased vaccination rates, shoppers returned and malls witnessed higher footfalls. Against this backdrop, the market registered healthy net absorption especially due to good pre-commitments in new mall completions. High-quality malls with low vacancy levels saw stable rents underpinned by increased footfall and sales recovery.


Retail leasing conditions in Australia were largely impacted by lockdown restrictions. Anecdotal feedback suggests SMEs activity has stalled in Sydney and Melbourne, while national chains are taking slightly more of a long-term approach and still willing to consider leasing opportunities. Rental declines were recorded in Sydney and Melbourne, but falls were slightly less for Australia’s other markets.

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 fueling the retail recovery around the region. Nonetheless, the threat of future potential outbreaks – exacerbated by more contagious variants of the virus – still lingers and continues to present downside risks to the outlook.



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