HONG KONG: Retailers may need to reappraise their expansion plans in Asia Pacific, largely due to an uncertain economic situation and slowing consumer spending, new research suggests.
CBRE, the real estate advisory group, reported that retail rents increased by 0.4% across 16 markets in the first quarter of 2012, after an even more modest 0.1% lift in the final three months of 2011.
Hong Kong posted the largest rental gain, up 1.9% in Q1, while China was up by 0.9%. Elsewhere, the Philippines, Singapore, Thailand, Vietnam and Malaysia were flat, whereas Australia and New Zealand saw a 0.3% quarterly decline.
While totals did improve by 4.5% annually at the regional level in Q1 2012, the analysis suggested many companies remain in hesitant mood.
"The sluggish rate of growth was due to domestic retailers exercising more caution towards further expansion amid the still uncertain economic outlook; resistance to high ... in selected markets; and rental discounts offered for space in new projects," it said.
More broadly, the CBRE stated that retail sales in Asia, excluding Japan, climbed by 11.6% year on year in the Q1 2012, compared with the 13.7% lift logged during the previous quarter.
"Rental growth is expected to ease across most markets in Asia Pacific in forthcoming quarters as the slowing economy forces consumers to cut back on discretionary spending, which may encourage some retailers to become more selective towards expansion," CBRE added.
Tourism has been another revenue driver in recent years, and visitor arrivals in Asia Pacific rose 6% last year to 216m. This acceleration is due to tail off, though, impacting China, Hong Kong, Malaysia and Thailand.
One positive development was that luxury brands did "steadily expand" in the first quarter, such as Massimo Dutti and Y-3 pressing ahead in Hong Kong. Gucci and Balenciaga are also targeting Shanghai.
Meanwhile, Christian Dior and Burberry both intend to unveil flagship branches in Taiwan, with Goyard and Panerai equally interested in taking sites in Singapore.
Fast fashion chains made such moves in "virtually all" key cities, including Zara and Lacoste in Seoul, and Uniqlo in Bangkok and Tokyo. Hollister and Forever21 also all have new stores in mind.
Additionally, food and beverage firms like Baskin Robbins, Tous Les Jours and Domino's Pizza have been especially active in Vietnam. Taiwan is another location proving attractive to members of this industry.
Data sourced from CBRE; additional content by Warc staff