Retail Market Insights

September 4, 2023 / By ,

Resiliency in Asia Pacific retail

Retail activity in the Asia Pacific region continued to pick up over the quarter, driven by resilient consumption demand and the recovery in international tourism. The gradual return of tourist arrivals from China, after the reopening of its international borders in January, has helped boost footfall in select markets and, more broadly, retailers’ confidence. The F&B sector remained a major driver of demand, while luxury retailers also began to make a comeback in some markets.

The aggregate Asia Pacific Retail Rental Index registered a marginal uptick during the quarter, indicative of a stabilising market after three years of rental declines.

Greater China

In Hong Kong, the drug and dispensary as well as the mass fashion segments drove leasing demand; meanwhile, the market also started to see the return of luxury brands and gold and jewellery retailers since the border re-opening. Rents in Hong Kong rebounded faster in the quarter, as most high street landlords increased asking rents more aggressively than in the previous quarter, on the back of improving retail market sentiment.

In Shanghai, retail footfall and consumption remained on a modest recovery trend, with general retail sales also gaining some momentum. Leasing activity improved as a result, with F&B tenants leading the recovery. As a result, the decline in prime ground floor rents decelerated, amidst a large pipeline of new retail development projects in the decentralised market.

A strong recovery in retail sales in Beijing had a positive impact on retailers’ outlook for expansion. F&B tenants accounted for a large portion of new leases during the quarter, while the fashion sector also witnessed an increase in leasing transactions. On the back of improved business confidence, some landlords at leading assets raised rents, especially for newly signed F&B leases.

In Guangzhou, leasing demand from the F&B sector remained strong; in particular, restaurants specialising in regional cuisines have opened at multiple locations. However, demand from other sectors remained tepid. Subsequently, rents continued to decline in most regions, except for Tianhe North District in the urban submarket which saw marginal growth.

North Asia

Demand in Tokyo continued to come from luxury brands, and limited vacancy persisted for ground floor space in prime areas. Ground floor rents continued to increase in Tokyo’s prime high streets, especially accelerating in Omotesando.

In Seoul, leasing activity was buoyant in a couple of prime shopping malls, while the return of Chinese tourists regalvanised market sentiment in the Myeongdong high street, thereby attracting new tenants. Seoul prime shopping mall and prime high street rents rose amid resilient market sentiment and returning footfall.

Southeast Asia

In Singapore, occupier demand for both retail and F&B spaces remained healthy in tandem with the uptrend in international visitor arrivals lifting retailers’ confidence. Rents throughout Singapore continued to rise across all submarkets in response to falling vacancy rates, the growth in international visitor arrivals, and the return of more employees to their workplaces.

An improvement in the Consumer Confidence Index in Bangkok, following the return of tourists and consumer spending activity, spurred healthy leasing activity. Strong demand continued to come from F&B tenants, some of which continued to launch new branches. As a result, prime gross rents especially for top-performing malls have returned to growth.

F&B and entertainment tenants continued to expand in malls across Jakarta. As consumer preferences are tending more towards experiential retail, interactive art exhibitions are also becoming increasingly popular in Jakarta malls, and several tenants have also implemented the concept of an interactive experience in their stores. A lack of new supply and sustained low vacancy rates have historically supported moderate rent growth, and prime mall rents continued to increase slightly in the quarter.

Net absorption in Manila remained almost unchanged in the quarter due to fewer store openings and closures. The F&B sector was a main driver of both new store openings as well as store closures. Average rents remained flat in the quarter due to the slower retail market, prompting operators to hold rates to induce demand.


Most leasing activity in Mumbai was recorded in the Suburbs and limited leases were witnessed in the other submarkets. Meanwhile, footfall in malls has remained healthy. Overall rents increased in the quarter, backed by healthy leasing activity observed in quality malls as well as by the throng of shoppers.

In Delhi NCR, leasing demand remained strong and leading retail brands continued to expand their store portfolios. The suburbs led leasing activity with F&B being the major contributor. Rents in premium malls went up slightly due to limited or no vacancy amid strong retailer demand.


In Australia, leasing conditions were in favour of tenants; notably, leasing agents report extended turnaround times for tenants to sign leases. Rents in Australia’s major cities across most sub-sectors held flat from the previous quarter, especially for regional and sub-regional centres.

Retail outlook

The global economy appears to be showing signs of resilience, with the IMF upgrading its forecast for global growth in 2023. Additionally, while inflation in many countries remains elevated, there are indications that the pace of policy rate hikes in some economies is slowing. This is likely to support consumer sentiment, and overall spending within Asia Pacific is still expected to remain relatively resilient, especially as Chinese tourists return to the market. However, the return of Chinese tourists is expected to be gradual due to the slower-than-expected economic rebound in China. Overall, amidst this confluence of regional and global factors, performance in the region’s retail markets is likely to remain relatively healthy in the coming quarters.




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