• Leasing momentum holds up but remains uneven—shaped by economic uncertainty, selective consumer spending, and shifting preferences for convenience, experience, and value.

• Modest regional rent growth continues, underpinned by strength in prime, well-located assets—but Greater China’s softness persists.

• Investment volumes surge to over USD 10 billion in Q2—more than double last year—with Singapore’s landmark transaction anchoring a broadening regional participation led by REITs and private platforms.

F&B, fashion, and experiential retail drove leasing demand—bolstered by resilient domestic consumption and tourism flows. Consumers sharpened their focus on value and convenience amid concerns about rising fuel costs, supply-chain friction, and broad-based inflation. This selectivity pushed retailers to prioritize high-traffic, well-located assets. Regional performance varied: Greater China saw selective, value-conscious activity; India maintained strong momentum, supported by robust leasing from domestic and international retailers; and Tokyo’s prime retail areas benefited from strong domestic and tourist spending.

Rents reflected this uneven landscape. Greater China continued to soften—landlords prioritized occupancy preservation and tenant retention through targeted incentives and flexible lease structures. In contrast, Tokyo registered sustained upward pressure across ground-floor and upper-tier spaces, while India saw modest gains concentrated in premium, availability-constrained malls. This resilience was not purely geographic—assets in strategic locations with diversified, high-demand tenant mixes consistently outperformed peers across markets.

APAC retail investment surged to USD 10.3 billion in Q2—more than double the prior-year quarter—as activity broadened regionally. Singapore anchored the surge via CICT’s SGD 3.9 billion acquisition of Paragon from Cuscaden Peak. Australian A-REITs remained active, with GPT acquiring assets from Lendlease’s APPF portfolio. In China, PAG expanded its Wanda-linked platform with a strategic Shanghai asset purchase; in Japan, listed developers and REITs drove institutional-grade transactions.

Outlook

The conditions that have fuelled recent leasing momentum — steady inbound tourism and underlying household spending resilience — show no signs of reversal. As a result, demand for well-located, experience-rich retail space is expected to remain healthy. New supply in region will rise, but remain concentrated: absorption stays firm in supply-constrained markets, while vacancy pressure sustains in oversupplied segments. Rent growth remains modest; landlords maintain pragmatic, fundamentals-driven strategies.