retail cities asia pacific: the fast fashion retail race
TRANSCRIPT
Retail Cities Asia Pacific
The Fast Fashion Retail Race
April 2015
Bangkok Strong domestic consumer demand and astute positioning by the Thai tourism board
have made Bangkok a hip shopping destination. Brandhungry shoppers from home and
abroad jump on the Skytrain and head for the city centre’s sleek malls like Siam
Paragon, CentralWorld Central Embassy and Siam Square One, or take a more
leisurely stroll around Asiatique the Riverfront mall and night bazaar beside the Chao
Phraya River. Bangkok’s retail landscape continues to diversify, with the opening of
HaHa Market and renovations at Central Plaza Bangna, and three high-profile malls
scheduled to open in 2015.
New malls enhance
appeal for
international retailers
Several global brands opened
their first stores in Thailand in
2014, and expansion plans are in
place for 2015. Three prime new
retail centres, The EmQuartier,
Central Westgate and Central
Festival East Ville plus
renovations at Central Plaza
Pinklao, are expected to complete
in 2015, adding another 265,000
sqm of retail space.
Vacancy to decline
after short-term rise
In 4Q14, 22,000 sqm of new
space was provided by the
completion of HaHa Market
(18,000 sqm) and renovations
at Central Plaza Bangna (4,000
sqm). The vacancy rate edged
down by 0.1% q-o-q to 4.7% in
4Q14, and is expected to rise
only in the short term, before
declining relatively quickly
given a high level of
precommitments.
Rents continue to rise
amidst a stable
political climate
Landlords responded to a
calmer political environment
by continuing to raise rents
in 4Q14, which drove average
gross ground floor rents higher
by 2.2% q-o-q, to THB 2,344
per sqm per month.
A positive outlook for
capital values
Rents are expected to rise due
to strong leasing demand and
relatively higher rental rates
at the new malls. This positive
outlook should push capital
values higher, while market
yields may also increase as
rental growth is expected to
outpace the growth in
capital values.
Consumer confidence
returns and tourism
rebounds
Thai consumer confidence
returned after the political
upheavals of early 2014, and
the volume of inbound tourists
recovered in 4Q14. Domestic
and international retailers
are being attracted by the
combination of economic
stability and strong domestic
consumer demand.
0.0% 2.6 mil sqm
+31% 2,344THB
2.4%
Note: Bangkok Retail refers to Bangkok’s Prime retail market
Source: JLL Research, 4Q14
FAST
FACTSCurrent retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psm pm)
Rental growth
(y-o-y)
NEW RETAILERS
Anyallerie
Bath & Body
Works
Chloe
La Martina
Laduree
Les Nereides
Maje
Retail sales growth
(December, y-o-y)
Beijing The Chinese capital has emerged as a sophisticated retail centre since its pre-2008 Olympic
urban makeover. Several large mixed-use developments feature contemporary malls in a city
once famed for its open-air markets. Today, Beijing is a coveted location for international
retailers, with glitzy venues like Oriental Plaza, China World Mall and SKP appealing to both
brands and shoppers. Designer boutiques plus high-end dining and entertainment draw a hip,
fashion-conscious clientele to Taikoo Li Sanlitun and Parkview Green, while Indigo in
Jiuxianqiao, Solana in the Third Embassy Area and Wangfujing Street are popular with
families.
New openings boost
super-regional market
Five new retail centres opened
in Beijing in 4Q14, with four
– Wanda Tongzhou, Paradise
Walk, Livat and Beijing One
– being located in suburban
areas beyond the Fifth Ring
Road. By adding 740,000 sqm
of space, these new openings
represent a turning point in the
suburban super-regional mall
boom in Beijing.
Only new downtown
mall opens with 90%
occupancy
Located several blocks from
the landmark Taikoo Li mall
in Sanlitun, Yongli Mall was
the city centre’s only major
opening in 4Q14. Its ground
floor features dining and cafes
plus a multi-brand luxury store.
Niche designers
expand despite
luxury slowdown
Amid slower growth in the
luxury market, Vera Wang
opened her first Beijing
store at Taikoo Li North. The
store marks the designer’s
second location in China after
Shanghai.
Slower rental growth
may be the new
normal
Strong competition in key
areas resulted in rental growth
remaining subdued in 4Q14.
Urban chain-linked rents
increased by just 1.0% q-o-q,
similar to the previous quarter,
representing a new normal of
slower rental growth. Market
yields were also unchanged,
and cautious investor
sentiment resulted in no major
sales being transacted.
Vacancy slightly
declines
The core vacancy rate
declined slightly to 4.9% in
4Q14, from 5.4% in 3Q14, as
some properties upgraded
their tenant mixes and helped
brands enter new projects or
expand their market presence.
9.1% 2.6mil sqm
+27% 1,315 RMB
3.2%
Note: Beijing Retail refers to Beijing’s Urban Prime retail market.
Source: JLL Research, 4Q14
FAST
FACTSCurrent retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psm pm)
Rental growth
(y-o-y)
NEW RETAILERS
Cesare Casadei
Marc O’Polo
Nicholas Kirkwood
Old Navy
Retail sales growth
(December, y-o-y)
Delhi India’s retail sector continues to evolve as single-brand foreign retailers expand across the
metro cities. As the nation’s capital, Delhi has benefited from the competition between
domestic and global brands to attract affluent, brand-savvy shoppers, especially in prime
areas with high-quality shopping precincts. The retail landscape of India’s compelling capital
is divided into several submarkets spread across its vast terrain. Popular hangouts for local
shoppers include Ambience, Promenade and Select City Walk in South Delhi and MGF
Metropolitan in Gurgaon, Great India Place in Noida, Europark in Ghaziabad, and Rohini City
Center and Metro Walk Mall in North Delhi.
Net absorption hits
nine-year low
In 4Q14, large exits from a mall
in the suburban submarket
caused overall net absorption
to decline to its lowest level
in nine years. New leasing
activity was sluggish as
retailers largely focused on
firming up plans for 2015, and
the delay in completion of
some malls caused leasing
volumes to remain low.
Rents remain stable
across the capital
Delhi rents remained stable in
all retail submarkets in 4Q14.
For 2015, retailer interest
is likely to be sustained in
the Prime South submarket,
with rents expected to
show marginal growth.
Rent increments in other
submarkets are likely to be
driven by individual projects
that are performing well.
Capital values to
show measured
growth
Capital values were generally
stable in 4Q14, except for
small increases of less than
1% q-o-q in the Prime South
and Prime Others submarkets.
Slightly higher growth is
predicted compared to rents
in 2015, especially for leased
assets, suggesting further yield
compression.
Slow investment
activity to continue
The investment market
remained quiet with activity
mainly driven by small
investors. With limited
availability of leased assets
and most prominent malls
being owned on an en bloc
basis, there is a lack of quality
retail assets available for
small investors.
Retailer expansion
on the horizon
An improving domestic economy
is likely to kick-start consumption
and retailer expansion should
regain momentum as
macroeconomic fundamentals
improve. Hopes that the
government will pass new
legislation for FDI in multi-brand
retail appear to be delayed, but
single-brand retail is likely to spur
demand as new entrants and
active retailers plan expansions.
n/a 1.1mil sqm
+44% 247INR
0.4%
Note: Delhi Retail refers to Delhi’s Overall retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Burger King
Fatburger
Natural Ice CreamRetail sales growth
(December, y-o-y)Current retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psf pm)
Rental growth
(y-o-y)
Guangzhou China’s southern megacity continues to benefit from ongoing urban redevelopment catalysed
by hosting the 2010 Asian Games. Upgraded city infrastructure includes state-of-the-art new
malls in prime areas. The Zhujiang New Town CBD beside the Pearl River entices global and
local retailers because of its luxury hotels, offices, dining and entertainment. The Mall of the
World is Guangzhou’s largest subterranean mall, Rock Square in Haizhu district is a
commercial and residential property with a large shopping mall, and TaiKoo Hui and
Panyu Wanda Plaza are mixed-use developments featuring a shopping mall, office towers, a
hotel and residences.
F&B and fast fashion
retailers continue to
be the most active
Slower retail sales increased
diligence among retailers
about selecting new store
locations. F&B and fast fashion
continued to drive leasing
activity in 4Q14. New mid-tier
international retailers to enter
the market included Victoria’s
Secret, GAP and Etude House.
Wanda adds to city’s
retail stock
A slow quarter for new malls
saw Panyu Wanda Plaza,
the third Wanda Plaza in
Guangzhou, open in early
November with a a net
lettable area of 49,500 sqm. Its
completion increased the city’s
total prime retail stock to NLA
1.2 million sqm.
Mature malls to drive
rental growth
Positive rental growth in mature
malls was achieved through
tenant and trade mix adjustments.
However, the landlords of
underperforming malls softened
their rental stance to combat
vacancy pressures. As a result,
overall rents grew 1.0% q-o-q to
RMB 357.5 per sqm per month in
4Q14. Established malls should
continue to drive overall rental
growth of between 3–4% in 2015.
Capital values
remain stable
Investment market sentiment
was largely unchanged in 4Q14,
with potential buyers concerned
about a possible oversupply in
retail space. Consequently, capital
values held broadly stable.
Weak expansion
demand to continue
Slowing economic growth and
competition from e-commerce
are likely to depress expansion
demand and tighten rental
budgets. New-to-market
international brands, F&B
operators and other services
based retailers are expected to
continue to expand, albeit
cautiously.
15.1% 1.2mil sqm
+74% 357 RMB
4.1%
Note: Guangzhou Retail refers to Guangzhou’s Overall Prime retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Ay Lazzaro
Bape
Chris Christy
Etude House
Gap
Givenchy
Holland & Barrett
Kenzo
Current retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psm pm)
Rental growth
(y-o-y)
Retail sales growth
(December, y-o-y)
Hong Kong Self titled as Asia’s World City, Hong Kong is a dynamic international shopping destination.
Global fashion stores, luxury brand flagships and innovative food and beverage outlets
compete for prestige sites that attract high-spending locals and visitors, particularly from
Mainland China. Shopping hotspots include the impressive Pacific Place, Harbour City, Times
Square, The Landmark and ifc, plus the coveted street-front stores along Queen’s Road
Central and Canton Road in Tsimshatsui. Ongoing demand for retail space has resulted
in several brands hot-footing into non-core shopping areas, such as Shatin, Tuen Mun and
Tsuen Wan.
Rental correction in
some fringe streets
in core areas
The changing shopping patterns
of Mainland Chinese visitors
combined with the sustained
disruption caused by the
Occupy Hong Kong protest put
further pressure on rents.
Coupled with demand dwindling
among some big ticket item
retailers, rental corrections were
seen in some fringe streets in
core locations during 4Q14.
Mixed leasing
response to
Occupy protests
The leasing impact of the protests
was mixed during 4Q14. Some
retailers were still keen on leasing
shops in areas less affected by
the protests, such as Italian lingerie
retailer La Perla, which pre-leased
all four levels of a new
development on Russell Street.
Other retailers used the protests as
a bargaining chip to negotiate for
lower rents, especially for shops in
core locations whose leases
expired during the quarter.
Tai Wai Station
project awarded
The Tai Wai station project was
awarded to New World
Development for HKD 2.9
billion. Upon completion, the
project will provide a 650,000
sq ft shopping centre, with
expected completion in 2018.
Investors target
undervalued assets
in non-core areas
Investors continued to target
undervalued properties with
upgrading opportunities in 4Q14.
Due to the already low fields for
properties in core locations,
investors were unwilling to chase
yields down further, leading to a
quarterly fall in capital values for
high street shops.
Stronger sales growth
predicted for 2015
Retail sales should post stronger
growth in 2015, although the anti-
corruption drive and the changing
shopping patterns of Chinese
shoppers are downside risks.
International retailers remain keen to
open stores given Hong Kong’s
mature retail market and growth in
tourism arrivals, which exceeded 60
million for the first time in 2014, but
they will likely adopt a conservative
approach in leasing negotiations.
-3.9% 2.4 mil sqm
+14% 173 HKD
1.0%
Note: Hong Kong Retail refers to Hong Kong’s Overall Prime Shopping Centre and High Street retail markets.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Castaner
Jnby
Kumamon
Le Relais de
L’Entrecote
Moomin Café
Orobianco
Proenza Schouler
Rag & Bone New York
Valextra
Retail sales growth
(December, y-o-y)Current retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psf pm)
Rental growth
(y-o-y)
Jakarta Indonesia’s fast-developing capital city boasts a rapidly diversifying retail market to match is
impressively evolving skyline. A constant stream of global brands are establishing flagship
stores in Jakarta before expanding nationwide to tap into rising urban incomes and changing
patterns of consumer behaviour across Southeast Asia’s largest country. Downtown Jakarta’s
smartest malls include Plaza Indonesia, Grand Indonesia, Plaza Senayan and Pacific Place,
all offering a colourful collection of fashion retail, luxury brands and dining.
Retail demand
strengthens despite
weaker currency
Retail demand remained robust
in 4Q14 despite the ongoing
weakening of the Rupiah
against the USD, high inflation
and government debt-reduction
policies. Retailers continued
to expand their store networks
and several new entrants
established a retail presence
in the Indonesian capital in the
expectation of sustained growth
in retail sales.
International retailers
open new stores
in central locations
The large CBD malls continued
to attract new outlets by both
local and international retailers.
Notable store openings included
Zara, Uniqlo and Central
Department Store at Grand
Indonesia, and Debenhams at
Lippo Mall St Moritz.
Government
restrictions impact
supply growth
Supply growth continued be
constrained by the Jakarta
provincial government’s
moratorium on new mall
development. Total prime retail
stock comprised 1.41 million
sqm at the end of 2014, with the
St Moritz shopping mall, which
added 50,000 sqm of stock in
3Q14, being the only project to
enter the market
last year.
Macroeconomic and
local market factors
stem rent increases
The removal of fuel subsidies and
resultant high inflation plus Rupiah
depreciation and a focus on maintaining
occupancy levels meant that most
landlords were unwilling to raise rents in
4Q14. Most landlords of prime malls in
Jakarta apply a flat IDR/USD exchange
rate in their leases and only the few that
adopt a floating exchange rate saw
rents increase in 4Q14. The net result
was a 0.4% q-o-q increase, and modest
rental growth is predicted for 2015.
Investor activity
expected to remain
subdued
It is rare for prime retail
assets to be offered for sale
in Jakarta, and 4Q14 was no
exception. Capital values
remained unchanged at IDR
49,344,061 per sqm at year end,
and market yield remained
largely stable at 11.0%. The
investment market is expected
to remain subdued with few
assets entering the market.
-10% 1.4mil sqm
+17% 5,420,116IDR
3.2%
Note: Jakarta Retail refers to Jakarta’s Overall Prime retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Bath & Body Works
Caron
Central
Ingersoll
Itacho Sushi
Leica
Riviera
Tory Burch
Retail sales growth
(December, y-on-y)Current retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psm pa)
Rental growth
(y-on-y)
Melbourne Melbourne is famed for its eclectic dining and year-round calendar of major sporting events
and cultural festivals, and is emerging as a heartland of Australian fashion and design.
Australia’s second most populous city also boasts a vibrant retail scene, ranging from the
artisans of Flinders Lane, jewellery shops on Crossley Street and the fashionable new
Emporium Melbourne mall on Lonsdale Street to the high-end stores along Chapel Street and
Collins Street, Bourke Street Mall and Chadstone the Fashion Capital, the southern
hemisphere’s largest shopping centre. Impressive suburban developments beyond include
Highpoint Shopping Centre and Craigieburn Central.
Consumer spending
growth varies across
retail segments
Retail spending growth continued to
accelerate, rising to 6.2% y-o-y in
November 2014, with Victoria ranked
Australia’s third strongest state for retail
spend growth, after New South Wales
and Tasmania. Food, household goods
and cafes, restaurants and take-away
food retailing drove the rebound, while
growth in clothing, footwear and
personal accessories slowed in the
second half of the year.
International
retailers drive
leasing demand
Leasing markets continue to be
driven by new international retailers
who are expanding beyond the
CBD malls into regional shopping
centres. Redevelopments of major
shopping centres are facilitating
this trend, and demand from
domestic retailers is also likely to
increase in certain categories, led
by the improvement in trading
conditions.
Retail supply
declines as mall
completions slow
Three small projects totalling
19,600 sqm completed in 4Q14.
Supply completions declined
significantly in 2014 after
having risen steadily between
2010 and 2013. However, 2014
marked the low point for the
current construction cycle, and
completions are forecast to
gradually rise in 2015 and 2016.
Minimal annual
change in rents
While minor changes in rents
were recorded in 2014,
performance varied between
retail categories. The CBD,
bulky goods and in sub-regional
sub-sectors recorded a
moderate yearly rental uplift,
which contrasted with a modest
contraction in the regional and
neighbourhood sub-sectors.
Fundamentals
appear healthy
for 2015
The expansion of major
international retailers should
help to support leasing demand
and new developments, and
a modest level of new supply
combined with stronger retail
spending should result in a
modest recovery in rental growth
in 2015. Investors appear to
have priced in strong growth, as
reflected in the yield tightening
evident through 2014.
4.2% 2.6mil sqm
+10% 1,462 AUD
-0.5%
Note: Melbourne Retail refers to Melbourne’s Overall retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Cos
Dior Perfume & Beauty
Zara HomeCurrent retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psm pa)
Rental growth
(y-on-y)
Retail sales growth
(December, y-on-y)
Mumbai India’s thriving financial and commercial centre is also the nation’s capital of style and design.
Brand awareness among consumers is high encouraging global retailers, luxury and fashion
brands to seek first-mover advantage in India’s trend-setting shopping market. Mumbai is a
large metropolis and the quality of retail developments varies considerably across both the
Prime North and Prime South submarkets. Mall shopping is a popular concept, though, and
smart shopping centres such as Palladium at High Street Phoenix, Inorbit, Infinity Mall and
Oberoi Mall offer a sophisticated mix of retail, dining and entertainment. New shopping
centres are only planned in Suburban locations such as Parle Square are primed to pamper
shoppers with a wider choice of store options.
Retail expansions tap
into positive market
sentiment
Both domestic and foreign retailers
were active in 4Q14, with participation
from a broader category of retailers
than in previous quarters suggesting
an improvement in overall market
sentiment. Among the brands to
leasespace in late 2014 were local
retailers Reliance Digital and Big
Bazaar, plus international retailers
Hamley’s and BritishBrewing Co.
Stronger leasing activity
offset by exits from
underperforming malls
Leasing activity picked up across all
submarkets. Net take-up in Prime
North was mostly due to pre-
commitments at Parle Square. The
Suburbs also recorded strong
leasing in 4Q14, but retailer exits
from underperforming malls that are
being refurbished resulted in net
absorption declining considerably
during 4Q14.
Slight increase in
stock with one new
mall opening
At the end of 2014, Mumbai’s
total retail stock was 9.6 million
sq ft. Parle Square in Prime
North was the only new mall
to open in the city in 4Q14, and
was the first new shopping
centre to come on stream in
this submarket for six years.
Space constraint in
leading malls to drive
rent rises
On an annualised basis, overall
rents increased slightly although
the Prime North and the Suburbs
witnessed no quarterly change in
rents. Capital values remained
unchanged, and overall market
yields were stable at 11.2%. The
lack of vacant space in successful
malls, which have done well to
attract high visitor traffic, should
see rents rise across all
submarkets in 2015.
Expansion of
suburban retail
expected
Underrepresented suburban
precincts such as Panvel,
Kalyan, Nalasopara are likely to
attract more organised retail in
2015. Domestic retailers facing
stiff competition from foreign
retailers in established markets
are likely to find these locations
an attractive proposition.
n/a 0.9mil sqm
+20% 250INR
0.8%
Note: Mumbai Retail refers to Mumbai’s Overall retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Burger King
Johnny Walker
Krispy Kreme
Payless ShoeSource
Current retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psf pm)
Rental growth
(y-on-y)
Retail sales growth
(December, y-on-y)
Shanghai China’s most fashion-conscious city boasts the nation’s most dynamic retail mix.
Sophisticated shopping resides on both banks of the Huangpu River that bifurcates this east
coast metropolis. In downtown Puxi, international and local brands vie for prime storefronts
on Nanjing Road and Huaihai Road, and in smart malls including Plaza 66, Réel, Hong
Kong Plaza, L’Avenue and the art-themed K11. Luxury brand flagships are a feature of
Xintiandi district and the restored heritage mansions lining the riverfront Bund. Across the
river in Pudong, ifc Tower and Superbrand Mall in the Lujiazui skyscraper district and Kerry
Parkside all offer upscale shopping and a classy range of dining.
Fast fashion and
affordable luxury
brands accelerate
store expansions
Fast fashion retailers stepped up
their store expansions with Zara
unveiling its largest Shanghai
flagship, Uniqlo opening three
outlets and Chamtime Plaza
welcoming a new H&M store.
Affordable luxury brands also
demonstrated an appetite for
expansion, with Michael Kors
committing to two new stores at
River Mall and Grand Gateway.
Vacancy rates
Show slight
increase
The ongoing government
crackdown on official entertaining
influenced an increase to 8.7% in
the vacancy rate in the core area
as several malls closed their
banquet-style upper-floor
restaurants. The non-core market
vacancy rate also increased to
7.3%, as new malls entered the
market with relatively high
vacancy.
Four new malls
Open across
Shanghai
Two new malls opened in both
the core and non-core areas
during 4Q14. The south section
of The Place, formerly known as
The HQ, opened in Hongqiao,
and the nearby Arch Walk held
a soft opening. Beyond the core
area, Chamtime Plaza opened
in Pudong, and Yangpu district
welcomed the Bailian Binjiang
Shopping Centre.
Rents rise slowly
in core and non-
core markets
Rents in the core area increased
by 1.3% q-o-q, to RMB 51.2 per
sqm per day, while non-core rents
rose by 0.7% q-o-q, to RMB 17.4
per sqm per day. In non-core
areas, a disparity exists between
mature regional centres and newer
malls which have little pricing
power. Landlords of new
properties are offering generous
terms to boost occupancy.
Large supply
Pipeline anticipated
in non-coremarket
Retailers should continue to seek
expansion opportunities in 2015,
and a large supply pipeline is
anticipated in the non-core
market. Higher quality suburban
malls are emerging, but these
projects may experience longer
stabilisation periods and mature
shopping centres in key retail
submarkets will likely enjoy strong
bargaining power.
8.3% 4.6 mil sqm
+62% 51 RMB
1.4%
Note: Shanghai Retail refers to Shanghai’s Overall Prime retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Beasts
Bulgogi Brothers
Pret a Manger
Pringle of Scotland
Current retail stock
(NLA)New supply forecast
(2015-2019)
Rental value
(psm per day)
Rental growth
(y-o-y)
Retail sales growth
(December, y-o-y)
Singapore Singaporeans love to shop, and strong domestic purchasing power plus a magnetic appeal
for Asian shopping tourists combine to create a comparatively mature retail market. The
premier retail destination is Orchard Road, where cutting-edge malls such as Ion Orchard,
Paragon, Mandarin Gallery, Orchard Central and the recently extended Plaza Singapura
feature top-name global brands. Beyond downtown, the redevelopment of Marina Bay has
delivered The Shoppes at Marina Bay Sands, a smart mall offering deluxe boutiques and
emerging labels, while the Suntec City Mall has been recently revamped.
F&B sales revenue
picks up
Sales revenue from fashion
apparel retailers continued to
decline, however F&B activity
supported demand.
Several new mall
openings deferred
Openings and refurbishments
planned for 4Q14 were largely
deferred, with Capitol Piazza,
the Marina Square extension
and the refurbishment of The
Orchard Hotel Shopping Arcade
have all been postponed to 2015.
However, 1.1 million sq ft of
space was added to the market in
the last quarter of 2014.
Declining tourist
arrivals and rising
operating costs
put pressure on rents
Weakening demand drivers
(including declining visitor
arrivals) alongside rising
operating costs due to a
continued labour shortage are
putting pressure on rents.
Capital values
weaken amid
seasonal decline
Capital values in the Suburban
and Marina submarkets
witnessed marginal declines
of 0.6% q-o-q and 1.0%
q-o-q respectively. The
Primary submarket remained
unchanged. Notably, most
investment sales occurred in
the Marina submarket.
Recovery in tourist
arrivals should
support retail sales
Rents should remain stable for
prime high demand locations in
the face of an expected
recovery in tourist arrivals,
which should support growth in
retail sales, and keep demand
steady for the next 12 months.
2.6% 38SGD 0.8%
Note: Singapore Retail refers to Singapore’s Prime, Suburban and Marina retail markets.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Elevatione
Giudi
Jack Wills
Jo Burton
Kiro
Kurt Woods
Lululemon Athletica
M. Maison
Vacheron Constantin
Vera Wang
2.2mil sqm +13%
Current retail stock
(NLA)
New supply forecast
(2015-2019)
Rental value
(psf pm)
Rental growth
(y-o-y)
Retail sales growth
(December, y-o-y)
Sydney Australia’s largest city is positioning itself as an international shopping destination offering a
varied portfolio of smart malls, department stores, designer brands and revamped heritage
shopping centres. A large working downtown population and a regular flow of tourists
create a strong market for the historic Strand Arcade and Queen Victoria Building in the CBD,
plus the strikingly remodelled Westfield Sydney and Mid City malls. Popular retail outlets also
extend along George Street and Oxford Street, while The Rocks and Darling Harbour
magnetise visitors. Beyond the city centre, malls such as Westfield’s Bondi Junction and
Macquarie Centre in Sydney’s north cater to suburban consumers.
Retail turnover
accelerates
The pace of retail turnover
growth in New South Wales
accelerated in the second half
of 2014, reaching 8.6% year-on
year in November 2014, more
than double the long-term
10-year average of 4.0%.
International retailer
expansions drive
leasing upturn
Leasing demand continues to be
driven by international retailers
expanding their store networks in
the CBD and building a presence
in suburban shopping centres.
Strong demand for prime CBD
space saw the vacancy rate
decrease from 3.6% in 1H14 to
3.1% in 2H14. Across all sub-
sectors, the average vacancy
rate fell to 2.2% in 2H14.
Retail supply
follows an
upward curve
Retail completions increased
to 134,600 sqm in 2014, after
reaching a trough of 106,800 in
2013. New supply additions will
increase in 2015-16, with
around 495,500 sqm of retail
projects scheduled to complete
over the next 24 months.
Investment activity
remains robust
Investment activity remained
strong in 4Q14, totalling AUD
918 million. Across New South
Wales, neighbourhood mall
sales accounted for one-third
of total transaction volumes in
2014, while subregional centres
accounted for 25% of sales. The
largest transaction in 2014 was
the sale of Birkenhead Point for
AUD 310 million in October.
Overall positive
outlook for 2015
Stronger retail spending growth
is likely to boost leasing demand
and in turn rental growth during
2015. Highly liquid investment
market conditions should
support strong activity with retail
yields expected to sharpen
slightly despite variations
between sub-sectors.
Note: Sydney Retail refers to Sydney’s Overall retail market.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Dior Perfume &
Beauty
Forever 21
Kate Spade
Little Caesars Pizza
Sephora6.9% 3.0
mil sqm+11% 1,933
AUD
-0.2% Current retail stock
(NLA)
New supply forecast
(2015-2019)
Rental value
(psm pa)
Rental growth
(y-o-y)
Retail sales growth
(December, y-o-y)
Tokyo Shopping in the Japanese capital is a dazzlingly stylish experience. Tokyo’s vast size means
its retail landscape is subdivided into distinctive districts, each featuring a compelling blend of
marquee malls, department stores and classy boutiques created by top-name designers.
Ginza is a refined area where chic brand stores reside alongside art galleries and high-
society cafes. Roppongi’s HQ offices and deluxe hotels are more than matched by Roppongi
Hills, one of Tokyo’s sleekest shopping centres. Young consumers and a recent influx of
Chinese tourists make for the trendy malls, en vogue fashions and high-definition video imagery
of Omotesando, Shibuya and Shinjuku, while Tokyo Bay’s large mall appeals to families.
Private consumption
shows signs of
recovery
Consumer spending is
recovering with sales at large-
scale retail stores in Tokyo
increasing by 1.8% y-o-y in
December, while luxury goods
sales in department stores in
Tokyo rose 3.3% y-o-y. Nominal
private consumption is expected
to accelerate in 2015.
Tourism spending
boost for retailers
Tourist consumption continues
to be a bright spot for the retail
market, as visitor arrivals reach
record highs amid expanded
tax exemptions for visitors and
yen depreciation. An 80%
increase in the number of
high-spending Chinese visitors
to Japan in 2014 helped boost
tourist spending by 40% from
2013.
Rents maintain growth
amid limited supply
Rents in 4Q14 averaged JPY
69,195 per tsubo per month,
registering modest growth for
the ninth consecutive quarter.
With robust demand expected to
persist and most upcoming
supply in the prime market
already pre-committed, available
space is likely to remain scarce
thereby supporting the growth
trend of rents.
New Ginza malls
attract premium
brands
The 12-storey Kirarito Ginza
shopping centre opened in
4Q14 with high-profile tenants
including Vacheron Constantin’s
first directly operated store in
Japan plus Tocca Hartmann,
Samsonite Black Label and Din
Tai Fung. The three-storey
Ginza 6-chome Takiyama-cho
mall, featuring Versace and
Brunello Cucinelli, is due for
completion in autumn 2015.
Favourable investment
conditions push capital
value growth
Strong competition for
investment assets is expected
to continue amid historic low
interest rates that provide
favourable conditions for
fundraising. This is likely to
place further downward
pressure on yields and
accelerate the growth of
capital values.
1.8% n/a 69,195 JPY
4.3%
Note: Tokyo Retail refers to Tokyo’s Ginza and Omotesando Prime retail markets.
Source: JLL Research, 4Q14
FAST
FACTS
NEW RETAILERS
Cole Haan
Delvaux
Dior Fragrance &
Beauty
Givenchy
IWC
MCM
Vacheron Constantin
n/a
Current retail stock New supply forecast
(2015-2019)
Rental value
(per tsubo pm)
Rental growth
(y-o-y)
Retail sales growth
(December, y-o-y)
Month 00, 2014 13
Month 00, 2014 14
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