Retail leasing in Asia-Pacific off to slow start in 2019

Downcast sales compel retailers to adopt a cautious approach to expansion

A shopping mall in Metro Manila, Philippines. Z. Jacobs/Shutterstock

Most leasing markets in Asia-Pacific reported a “quiet start to the year” as tenants reckoned with downcast sales.

Weaker consumption is likely to subdue leasing activity over the course of 2019, warned CBRE in a report released this month.

“Economic headwinds will force a rethink of operating strategy, with retailers expected to slow their pace of expansion and focus more on enhancing the overall shopping experience,” the consultancy reported.

The expansion of F&B retailers, consisting of cafes, dessert outlets and casual dining establishments, held steady in the first quarter amid concerns of over-saturation, especially in such markets as Singapore and Australia.

Due to a fast-ageing populace, Hong Kong has seen strong demand from tenants in the healthy F&B space, as well as healthcare and medical centres.

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The slowdown in fast fashion persisted in China and Korea, among other markets, as brick-and-mortar stores faced stiffer competition with e-commerce.

The beauty industry caught retail developers’ attention this year. Landlords from China and South Korea to Australia are increasingly seeking tenants in the cosmetics and personal care industries due to their strong sales performance and high foot traffic.

Shopping centres and department stores are expected to either “undergo renovations or repositioning exercises” by introducing new store formats and offering experiential value.

In Hong Kong, for instance, pop-up stores are allowing retailers to fortify brand awareness and gauge consumer appetite at the same time.

In China, e-commerce players are delving more and more into brick-and-mortar; online stores such as Xiachufang, Shejiaoquan and continue to establish physical outlets.

Similarly, an online grocery in Singapore recently received special dispensation to open a supermarket and F&B store in a warehouse.