The Retail Index
First Quarter 2015
Shopping Centres
Mid-tier fashion and food and beverage operators drive
demand
During 1Q15, retail rents for the most expensive locations in shopping
centres remained relatively stable. Of the 18 featured markets, only
two (Manila and Guangzhou) saw a quarterly rental increase of 2% or
more for the most expensive locations, while the remainder mostly
recorded small increases or flat rents. The aggregate Asia Pacific
Retail Rental Index increased 0.8% quarter-on-quarter, slightly higher
than the 0.3% in 4Q14.
Greater China
In addition to continued growth of mid-tier fashion and F&B
brands in China, premium snack brands also expanded. Healthy
retailer demand supported rental growth (0.7 to 2.3% q-o-q) in
Tier 1 markets.
Total tourist arrivals to Hong Kong continued to grow by doubledigits in January-February, led by Mainland tourist arrivals.
However, retail sales were down 2.0% y-o-y over the same
period, partly reflecting weak sales of luxury goods (15.9%
y-o-y). Demand for Prime shopping centres was largely intact,
supported by resilient local consumption and demand being
diverted from high streets.
Figure 1: Asia Pacific Shopping Centre Rents, 1Q15
F&B chains continued to dominate activity in Beijing with midmarket restaurant chains and premium snack brands expanding.
Even amid slow luxury sales growth, Louis Vuitton upgraded its
store at China World Mall into a flagship location, quintupling
its store space. Meissen Couture also opened its first China
flagship store at China Central Mall.
Mass market fashion and F&B brands continued to expand in
Shanghai with H&M and Pull&Bear committing to new stores. In
the high-end market, while affordable luxury brands continued
to look for space, tier 1 luxury brands kept expansion plans
on hold. Facing poor sales performance, some brands closed
underperforming stores and relocated to stronger properties.
International retailers continued to enter and/or expand in
Guangzhou, especially in mature malls in core locations.
Relatively high-quality malls in emerging precincts were also a
popular option for expansion. For instance, Panyu Aoyuan Plaza
in Panyu Shiqiao introduced Uniqlo while Happy Valley in the
Zhujiang New Town brought in H&M.
Southeast Asia
Flat to modest rental growth (0.1 to 3.0% q-o-q) was recorded
in Southeast Asia.
Capitol Piazza in Singapore leased space to several new-tomarket high-end brands such as Max Tan and Napapijri for their
flagship stores. In contrast, several existing retailers such as
Marks & Spencer consolidated operations and focused only on
the better performing stores. Malls with clearly defined target
markets (i.e family malls) tended to have higher occupancy than
those targeted to the general public.
Hong Kong
Sydney
Guangzhou
Shanghai
Melbourne
Brisbane
Singapore
Beijing
Perth
Adelaide
Auckland
Mumbai
Delhi
Bangalore
Chennai
Bangkok
Jakarta
Manila
The EmQuartier, a new luxury mall, opened in Bangkok with
both domestic and international brands. New-to-market tenants
comprised nine fashion brands and seven F&B outlets including
some noteworthy brands such as Tiffany & Co., Banana
Republic and Dior Homme.
0
2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Net Face Rents (USD per sqm per annum)
Source: JLL. See appendix for definition of rents
In Jakarta, fast fashion and F&B were the most active segments.
Notable openings included Singapore restaurant chain Itacho at
Grand Indonesia and Keds, an American shoe brand, which reentered Indonesia with a new store at Senayan City.
Australia / New Zealand
International retailers continued to be active in Australia as they
looked for space in CBD and regional shopping centres. Uniqlo
and Topshop Topman both committed to additional stores
at three major suburban shopping centres in Sydney, while
Japanese retailer Muji is due to open its first Sydney store and
third Australian store at CBD shopping centre, The Galeries,
in May 2015. As retail spending strengthens, leasing market
conditions have also started to improve for domestic retailers.
India
C
ompletion delays and a lack of available space in premium
malls in India continued to limit mall leasing activity.
Limited rental growth expected in most markets
In China, Tier 1 markets are expected to see modest rental
growth amid sustained demand from mid-tier fashion brands and
F&B. In Hong Kong, a more challenging trading environment is
likely to see retailer caution prevail.
Figure 2: Asia Pacific Retail Rental Index
150
145
International retailer expansion should persist in emerging
Southeast Asia markets as brands look to tap into growing
consumer demand. In Singapore, higher labour costs together
with weak retail sales and visitor arrivals are likely to put
downward pressure on rents.
140
4Q03 = 100
135
130
125
In Australia, the expansion of major international retailers
across the CBD and in regional shopping centres will continue
throughout 2015, which is likely to result from development-led
opportunities. As retail fundamentals improve, average specialty
rents are forecast to increase over 2015, though at a slightly
slower pace than previously forecast.
120
115
110
105
Leasing activity in Delhi and Mumbai is likely to pick up in the
second half of 2015, with a number of malls nearing completion
and with some having healthy pre-commitment levels. However,
rental growth is likely to be limited.
1Q
0
3Q 4
0
1Q 4
0
3Q 5
0
1Q 5
0
3Q 6
0
1Q 6
0
3Q 7
0
1Q 7
0
3Q 8
0
1Q 8
0
3Q 9
0
1Q 9
1
3Q 0
10
1Q
1
3Q 1
1
1Q 1
1
3Q 2
1
1Q 2
1
3Q 3
1
1Q 3
14
3Q
1
1Q 4
15
100
Source: JLL. See appendix for definition of rents
Table 1: Asia Pacific Shopping Centre Rents
Average Rent
1Q15
(USD per sqm per annum)
Quarterly Change
1Q15 vs 4Q14
(Local Currency)
Yearly Change
1Q15 vs 1Q14
(Local Currency)
Central
15,572
0.5%
1.0%
CBD
6,064
0.3%
1.8%
Tianhe CBD
5,580
2.3%
10.3%
Shanghai
West Nanjing Road
5,140
0.7%
7.0%
Melbourne
CBD
4,821
0.3%
1.3%
Brisbane
CBD
4,651
0.0%
1.0%
Singapore
Orchard Area/District 9
4,305
0.1%
0.6%
Beijing
Wangfujing Road
3,740
1.1%
4.0%
Perth
CBD
2,520
0.0%
0.0%
Adelaide
CBD
2,322
0.0%
0.0%
Auckland
New Market
1,644
0.0%
1.2%
Mumbai
Prime South
1,417
0.0%
2.4%
Delhi
Prime South
1,355
0.0%
0.0%
Bangalore
Prime City
961
0.6%
1.3%
Chennai
Prime City
719
0.0%
0.0%
Bangkok
Central Bangkok
680
1.0%
9.5%
Jakarta
CBD
640
0.0%
10.4%
Manila
Makati CBD
543
3.0%
12.8%
Hong Kong
Sydney
Guangzhou
Source: JLL. See appendix for definition of rents
High Streets
Retailer demand mixed
Greater China
In Hong Kong, high asking rents, lacklustre retail sales and fears
of recurrence of the Occupy Movement protests have moderated
demand for street shops. As a result, landlords were willing to
offer more accommodative rental terms for high street shops
during 1Q15. Rents retreated in each of the citys four major
retailing precincts for the first time since the GFC. Mercedes
Benz leased a G/F shop in Central for around HKD 4.8 million
per month. The shop was previously leased for around
HKD 6 million per month.
Facing poor sales performance, Chanel launched price cuts in
1Q15 to pull sales back to Mainland China. Shoppers in
Shanghai - who had been used to prices of luxury goods only
going up - crowded into Chanel stores in Plaza 66 on West
Nanjing Road to purchase lower priced bags.
North Asia
Rents continued to rise in Tokyo amid improving consumer
confidence and a consumption boost from tourists. Strong
retailer demand and limited availability in prime areas resulted
in demand shifting into adjacent streets and as a result, vacancy
moved lower in these areas. Interestingly, some leasing deals
closed in adjacent areas had rents at comparable levels to the
prime markets. Notable new store openings in 1Q15 included
Ermenegildo Zegna Ginza and Miu Miu Aoyama.
Retailer demand for Seouls main high street area Myeongdong
remained firm in 1Q15, underpinned by continued growth in the
tourism industry. However, demand from fashion brands in other
high street areas that are less driven by tourist consumption
appears to have weakened. Hong Kong jeweller Luk Fook
opened its first store in Seoul at Walkerhill Duty Free while
luxury brand Prada also opened a new shop.
Southeast Asia
Notwithstanding the weak business sentiment in Singapore
evidenced by lower visitor arrivals and dwindling retail sales,
occupier demand was surprisingly stable. Spanish shoe brand
Pretty Ballerinas and British fashion brand Gieves & Hawkes
both opened their first standalone stores in Paragon.
Australia / New Zealand
A modest rental recovery is evident with average CBD retail
rents in Sydney and Melbourne edging up in 1Q15. Both city
centres have been gradually revitalised through development
and the addition of international retailers.
Topshop Topman opened a new store on Queen St in Central
Auckland while Seed Heritage opened a shop in Ponsonby.
India
High street locations in India continue to garner retailer interest
due high foot traffic and a lack of quality mall space.
Figure 3: Asia Pacific High Street Rents, 1Q15
Tokyo - Ginza
7,189
Seoul - Myeongdong
6,291
Shanghai - West Nanjing Rd
5,472
Singapore - Orchard Rd
4,305
Osaka - Shinsaibashi
2,754
Sydney - CBD
2,716
Melbourne - CBD
2,651
Brisbane - CBD
2,505
Auckland - Queen St
1,984
Mumbai - Linking Rd
1,570
Delhi - Connaught Place
1,487
517
Manila - Bonifacio Global City
0
5,000 10,000 15,000 20,000 25,000 30,000 35,000
Net Face Rents (USD per sqm per annum)
Source: JLL. See appendix for definition of rents
Appendix
Shopping Centres
Note 1: Figure 1 & Table 1 rents are average net face rents for prime level locations in
the best prime shopping centres and on a net lettable area basis. Net face rents
are calculated excluding the tenant outgoing costs and landlord incentives are
not taken into account.
The most expensive locations in shopping centres can garner rents in excess
of three or four times that of the average mall level. Limited available space due
to strong demand and a lack of new additions in the most expensive & central
locations contribute greatly to the rental gap. A higher level of sales activity and
increased brand exposure are core reasons retailers seek these locations.
Note 2: Figure 2 is a stock-weighted average of average net face rental movements for
prime shopping centres across Asia Pacific.
High Streets
Note 1: Rents are average net face rents for the high street(s) and on a net lettable area
basis.
Note 2: Rental figures for Australia are for strip shops along these streets: Sydney Pitt,
George & Castlereagh; Melbourne Collins & Bourke; Brisbane Albert &
Edward; and which are not a part of prime shopping centres.
Jones Lang LaSalle
2015 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable;
however, no representation or warranty is made to the accuracy thereof.
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