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Prime Retail Rental Growth in Asia Pacific

By on Nov 10, 2011 in Property News

The CBRE Asia Pacific Prime Rental Index recorded another solid period in the third quarter despite the uncertain global economic picture, with growth accelerating to 2.4% q-o-q compared to 1.6% q-o-q in the second quarter. Greater China remained a key driver of regional rental growth as key markets in the PRC saw retailers expand aggressively on the back of strong domestic retail spending. Hong Kong and Singapore were the other standout performers in Asia, whilst rental growth slowed in the Pacific.

Retail sales growth remained healthy in most parts of Asia Pacific during the period, rising by 7.6% y-o-y in September (excluding Japan). However, the rate of growth began to slow as consumers across the region turned slightly more cautious amid the weakening global economic outlook. The near term economic prospects for the region nevertheless remain positive, although mild moderation in growth is expected in the months ahead and much hinges on the performance of the United States and Eurozone.
 
The third quarter saw further expansion by domestic and international retailers in most markets despite slowing retail sales growth and weakening consumer confidence. International fast fashion retailers continued to expand and enter new markets, whilst firms in the luxury goods segment were particularly active in Greater China, Japan and the Pacific. Retailers in the watch and jewellery, electronics and F&B sectors were also in expansion mode.

Mr. Sebastian Skiff, Executive Director, CBRE Retail – Asia, said, “Several major new projects, notably in Beijing and Guangzhou were completed during the third quarter. Many Asian retail markets continue to witness a construction boom and a large quantum of additional retail supply is scheduled to be completed over the next couple of years. Nevertheless, the bulk of new stock in the development pipeline across Asia is situated in fringe locations or emerging retail areas, and thus the availability of quality and well located retail stock in prime areas will remain limited in key markets going forward.”

Retail rents in Asia will continue to rise going forward as domestic consumption remains firm and international retailers expand. The situation in the Pacific is also broadly positive in light of the low vacancy in key locations and sustained demand from overseas brands. Rental growth across the combined region will inevitably slow in forthcoming quarters, however, as the deteriorating global economic outlook sees consumers begin to cut back on discretionary spending, which may result in selected retailers adopting a more cautious attitude towards expansion.

To read or download a full report of CBRE’s Asia Pacific Retail MarketView, please click here.

For more information regarding Bangkok retail spaces for rent, please contact CBRE’s Retail Services team on +66 2 654 1111 ext 221 or bkk_retail@cbre.co.th .

 

Chris Hardy has extensive research experience. Chris specializes in property research internationally writing for CBRE specifically about global issues and trends.

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