Asia Pacific Real Estate Investment Volumes Forecast to Hit USD165 billion in 2021

Jayna Poh • 22/04/2021
Retail sector in Mainland China remain the most resilient in the region

Two-thirds of retail strips in Asia Pacific saw rental declines in 2020, with Causeway Bay in Hong Kong experiencing the steepest decline at 43%, according to Cushman & Wakefield’s latest Main Streets report. However, the retail sector in Mainland China had the least disruption amongst all the markets in the region, with average rental declines of 5%. In contrast to the Beijing Central Business District (CBD) which had a 14% decrease in rental in 2020, the Luohu district in Shenzhen saw the largest rental growth of 5%. Despite these changes, there was little change in rental rankings across the region as the top three most expensive cities for retail remain as Hong Kong, Tokyo and Sydney.

“The key market drivers in operation due to COVID-19, namely international border closures, lockdowns and work-from-home practices have been universally felt across the region. As a result, we see little change in Asia Pacific rent cost rankings, at least for the top 10 cities, with Hong Kong, Tokyo, Sydney, Seoul and Osaka maintaining their dominance at the top of the list,” noted Dr. Dominic Brown, Head of Insight & Analysis, Asia Pacific at Cushman & Wakefield. “At the other end of the spectrum, Indian markets feature prominently, taking up the four least expensive spots in the region. In comparative terms, rents in Tsim Sha Tsui, Hong Kong are nearly 80 times more expensive than Banjarra Hills in Hyderabad.”

Most expensive retail districts by market ranked by Q4 2020 rent (USD/sqft/yr)

RANK 2020

RANK 2019






Hong Kong

Tsim Sha Tsui










Pitt Street Mall










Shinsaibashisuji / Midosuji





West Nanjing Road















Bourke Street





Orchard Road


“The pandemic changed and shifted consumption patterns across retail malls in Singapore amidst travel restrictions and remote work practices,” said Wong Xian Yang, Head of Research, Singapore at Cushman & Wakefield. “As such, retail spaces which are dependent on tourists and office workers have suffered more as compared to retail spaces which derive footfalls from residential catchment areas. We see this reflected in rents across markets, where Orchard and other city area retail rents fell by 7-8% in 2020 as compared to their suburban counterparts of only -3%.”

Retail Trends

• Rise of localism – Shoppers have become more supportive of local businesses to help them survive through the pandemic. In a 2020 global survey of 8,000 consumers carried out by Rakuten Advertising, 50% of households responded that they had purchased more from local businesses. Furthermore, consumers in Asia Pacific were more likely to avoid making international online purchases, showing a preference to spend their money domestically.

• Growth of e-commerce – The pandemic has inevitably increased online retailing as lockdowns and health concerns have pushed purchasers onto digital platforms. For the Asia Pacific region, which was already a digitally hungry region, the growth of e-commerce comes as no surprise. The region has a 64% share of global e-commerce at USD2.5 trillion out of a global total of USD3.9 trillion, according to e-marketer.

• The pandemic has also transformed the luxury goods sector with online share of luxury purchases increasing from 12% in 2019 to 23% in 2020, according to Bain & Company. However, it remains too early to tell if this is a temporary enforced shift or start of a much wider acceptance of online retailing for luxury goods. While consumers of luxury goods generally prefer to buy in-store to enjoy the accompanying high-quality service, the growing presence of omni-channel marketing will have an impact on the evolution of the luxury goods sector.

Xian Yang added, “As consumption patterns change and e-commerce grows, savvy retailers who are able to provide a cohesive omnichannel experience are positioned for the post-pandemic retail market. We have seen successful local e-retailers leveraging on lower rents to take up prime spaces in top tier malls to expand their brand presence and provide additional consumer touchpoints. An example would be local fashion e-tailer Love, Bonito, who have continued to expand into physical retail despite the pandemic and opened their fifth store at ION Orchard.”

Looking Ahead

The retail sector is facing some of the most significant cyclical and structural headwinds of all real estate sectors; some of which were in play prior to COVID-19 while others have occurred as a result of swift and strict restrictions on domestic and internal population mobility. Such issues have had a disproportionate impact on high-end retail destinations. It is unlikely that these districts will immediately spring back to pre-COVID performance because of the slow pace of recovery in international travel, but at the same time it does not mean that they will fade into irrelevance. The progress made in the roll-out of vaccine programs globally and the gradual return to normalcy will also contribute to the overall recovery of the retail sector.

For retail, in the near term, this means greater bifurcation in consumer spending; with value-oriented concepts continuing to flourish and luxury retail rebounding more quickly. Following the 2008 global financial crisis, global luxury retail generally rebounded within a 12 to 18-month timeline. Evidence from China in 2020 supports this view, which should provide a dose of optimism to the luxury sector.

While the focus is understandably on current concerns and difficulties, it would be remiss not to keep an eye on longer term opportunities. Over the next decade, the Asia Pacific regional economy will continue to outpace the rest of the world and grow from a 36% share to 40%. The middle class is forecast to swell by over 1.5 billion over the same period. These trends, together with the fact that many markets across the region, especially in South East Asia, remain underserved by physical retail floorspace highlight the opportunities on offer beyond the current COVID-19 affected conditions.

Note: For more insights, please refer to Cushman & Wakefield’s Asia Pacific Main Streets Report 2021.

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