Extract from JLL’s Redefining Retail Places

In Asia Pacific, urbanisation has been one of the most compelling stories of the past decade as an unprecedented number of people have moved to cities and helped drive wealth creation. The region now accounts for slightly more than one-third of the world economy, and that share is set to rise further by 2020 with forecast growth roughly twice as fast as the rest of the world from now to the end of the decade. Asia Pacific is home to more than half of the world’s population and the number will surpass 4 billion by the end of the decade.

Watch Anuj Puri, Global Retail Agency Board Chairman, discuss the impact of urbanisation and population growth on the retail sector in Asia Pacific.

A region of contrast…

With an additional 40 million people living in cities across the region each year, the number of urban areas with a population of at least one million is set to rise by 48 to 268 in 2020 (United Nations, 2012). China and India will account for the vast majority of new people living in cities from now through 2020, due in part to the sheer size of their populations. However, notable increases in city populations are projected through the end of the decade for other countries in Asia Pacific such as Vietnam (21.1% growth in urban population) and Indonesia (16.3%) and even cities in highly urbanised countries such as Kuala Lumpur (19.4%) and Sydney (11.8%). It is important to keep in perspective that urbanisation rates across the region vary quite significantly as shown in Figure 1, with Japan and Australia amongst the most urbanised countries in the world while in most South Asian and Southeast Asian countries the majority of people still live in rural areas.

Figure 1: Urbanisation rate by country

Source: United Nations (Population Division; World Urbanization Prospects), 2012; JLL Research
Note: Urbanisation rates are interpolated values based on 5-year interval estimates from the U.N. figures

A more sophisticated shopper…

With incomes for city dwellers generally surpassing those in rural areas and a growing agglomeration of people in cities across Asia Pacific, the middle class population is expanding and fuelling a rise in discretionary spending. While the region has many rapidly growing retail markets such as Delhi, Jakarta and Chongqing, Asia Pacific is also home to many large, mature markets such as Hong Kong, Singapore and Tokyo.

Given these demographic and income trends, the demand for modern retailing facilities is growing strongly. Shopping centre stock has exploded in size over the past decade, largely driven by a substantial increase in China (Figure 2). However, with more discerning consumers, a growing presence of international retailers (A Magnet for Retail) and rapid adoption of technology, it is becoming increasingly important to focus on the all-around shopping experience. Asia Pacific’s huge population, rapid economic growth and rising wealth levels will act as a catalyst for further growth and evolution of the region’s retail markets.

Figure 2: Shopping centre stock

Source: JLL Research (Real Estate Intelligence Service), 1Q14
Note: Total stock refers to Overall Prime and is on a net lettable basis. China includes 28 cities, Southeast Asia four capital cities, Australia & New Zealand eight cities and India seven cities.

Further information on Urbanisation and Redefining Retail Places

Redefining Retail Places: for further information on trends influencing the retail landscape

Global: Discover how urbanisation and population growth are influencing retail real estate at a Global level
Or visit JLL Global City Research Centre here.

EMEA: Discover how urbanisation and population growth are influencing retail real estate in EMEA

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