Brand Expansions Driving Asia Pacific Retail Sector in Second Quarter
Here’s an overview of the region’s retail performance in the second quarter:
The take-up of physical retail space remains healthy as evidenced by the entry and expansion of relevant-to-market retail brands.
Prime rents in Orchard could move to growth soon, fueled by stronger consumer sentiments and tourism. Singapore’s tourism market could enjoy a further boost, following the historic Trump-Kim summit meeting, which is said to have netted Singapore more than S$700 million in world-wide media exposure. Prime Orchard rents rose 0.5% quarter-on-quarter (QoQ) to 34.55 in the second quarter of 2018.
Health and beauty chains are stepping up their expansion in the battle for market share. LVMH-owned Sephora, Lotte’s la cosmetique and Beauty in Bow, the wellness select shop of Hyundai Department Store, are all expected to extend this trend.
Demand for retail space on high streets continued to be supported by the expansion of athleisure brand retailers. With upbeat tourist arrivals and retail sales, especially in the watch and jewellery category, luxury brand operators have shown interest in re-entering the market, should an opportunity arise in good locations.
National retail investment volume rebounded strongly from a soft first quarter to record AU$2.4bn worth of transactions in the second quarter of 2018. This result was driven by both a larger number of deals, and a larger average deal size. YoY, Q2 2018 volume was also 55% stronger than Q2 2017 (AU$1.5bn).
The opening of two new shopping centers and retail podiums in Hanoi in Q2 2018 resulted in a significant increase in the total retail stock by 4.8% QoQ and 7.3% YoY. Overall occupancy trended upwards with healthy absorption at new projects.
The majority of transactions in the second quarter of 2018 were from food and beverages outlets . In Bengaluru, rents in existing malls remain unchanged due to no new mall supply this year with main streets continued to be seen as a viable alternative.
The tourism sector played an important role in driving the Thai economy which continued to to grow as international tourist arrivals increased by 8.8% from the previous year to 35.4 million, especially the Chinese. The average rental rate in Bangkok’s Center Retail District (CRD) reached THB 362.45psf/mo. Despite more retail options, vacancy rate remains below 10%.
Know more about Asia Pacific’s retail market and how the other sectors fared this quarter here.
Insights • Economy
Retail sales remain below pre-pandemic levels (Chart I), as footfall in malls continues to be hit by an ongoing capacity limits, border controls and work from home arrangements. From dine-in bans to the cap on group sizes, restrictions in the F&B sector have dealt an even greater blow to the retail industry as F&B establishments are integral to draw traffic to any retail sites.