Retailer demand for leases in Asia Pacific in the third quarter maintained its strength, fuelled by fast fashion retailers, says CBRE.
Japanese and Korean groups in the fast fashion and cosmetics sectors in particular were hungry for cross-border expansion, while department stores also became more active. Likewise, in the luxury sector, big high-end brands continued to add new stores in Beijing and Shanghai but were more focused on core areas in top cities as opposed to expanding elsewhere.
In Southeast Asia, rising demand for new trends and styles from the emerging middle class continued to spur the entry of fast fashion retailers into key markets. During the period, Zara opened its first store in Hanoi and its sister brands Bershka and Stradivarius established their first outlets in Manila.
H&M opened a 41,980 sqft flagship store in Bangkok’s Central World – its fourth shop in the Thai capital – and launched its first store in Jakarta in early October.
Beyond Southeast Asia, Abercrombie & Fitch signed a lease for a 23,680 sqft space in Shanghai for its first store in mainland China; Forever 21 opened its first store in Shenzhen with a 23,680 sqft unit; and H&M’s COS launched its first branch in Singapore with a 5900 sqft store.
“Retailer demand is expected to remain firm overall, and will continue to be led by bridge brands and mid-range fashion groups, with many retailers in these categories focusing on key markets in China and Southeast Asia for new market entry and expansion,” said Sebastian Skiff, executive director, CBRE Retail Asia.
“In markets where they are already established, retail groups are looking for brand extension opportunities to launch their related brands in premium locations.”
He said the expect core luxury retailers to remain active, although most groups already established in key markets such as Beijing, Hong Kong, Shanghai and Tokyo are now focusing the upgrading and repositioning of existing stores to improve customer experience.
“The relatively newer to market category now actively opening stores in the luxury segment is the creative or affordable luxury brands that will continue to build their presence across core markets like Shanghai, Beijing, Chengdu, Hangzhou and other key China cities,” said Skiff.
CBRE expects overall retail rents in the region will most likely continue to experience slight growth over the next three to six months.
“In key markets such as Hong Kong, Shanghai and Singapore slightly more subdued demand combined with a lack of space in core locations and high rents will continue to restrain retailer expansion and limit further rental growth. Retailers in these markets will continue to focus on key requirements in core areas, a trend that will impact rents in secondary locations,” said Jonathan Hsu, director, CBRE Research, Asia Pacific.