Asia Pacific Retail Property MarketView Q2 2014

Asia Pacific Retail MarketView Q2 2014

RENTS 1.8% q-o-q

CBRE Global Research and Consulting

VISITOR ARRIVALS Jan-May 2014 5.7% y-o-y *

RETAIL SALES Jan – May 2014 6.7% y-o-y *

CONSUMER CONFIDENCE Asia Pacific Index

RETAILERS MORE CAUTIOUS BUT RENTAL GROWTH PICKS UP SPEED AS DEMAND FOR PRIME SPACE REMAINS FIRM 

Economic growth in Asia Pacific improved in Q2 2014, mainly on the back of the strong recovery in demand from the West which fed through into higher export growth for the region.



Tokyo saw rental growth jump by 9.1% q-o-q as demand strengthened in key retail districts where supply remains limited.



Overall rents in Tokyo are expected to surge by 10 – 15% over the remainder of the year.

Rental growth in secondary areas will pick up.



Hong Kong recorded the first decline in retail rents since the end of 2008.



The outlook for major markets in Australia is positive and rents are bottoming out but growth is unlikely to arrive before 2015.





1

Retailers in Asia Pacific turned more cautious in Q2 2014 but growth in the CBRE Asia Pacific Retail Rental Index gathered pace to 1.8% q-o-q, mainly due to surging rents in Tokyo. Demand for space in core areas remained firm and this, combined with limited availability, continued to support rental growth in prime locations across the region. Retailers are more reluctant to expand in secondary locations and landlords in such areas have softened their stance towards lease negotiations.

Despite the overall cautious mood, F&B retailers continue to display strong demand for space in almost every market. Mid-range fashion retailers continue to perform well in most markets and are expanding, albeit with caution. Luxury retailers generally remain quiet with the exception of a few markets such as Tokyo, Bangkok and Manila. Retailers in this sector are very cautious with many larger groups undertaking strategy reviews and consolidating store portfolios.

Many mature markets saw more cautious expansion by retailers because of slower consumption growth, high rents and other operational costs including labour. This dragged on rents in Hong Kong, which recorded the first decline in prime retail rents since the end of 2008. Rents in Singapore displayed no growth. Leasing activity in Southeast Asia and the Pacific was stable and most markets saw average rents remained unchanged.

Overall retailer demand in Asia Pacific will weaken over the remainder of the year. Retailers in most markets will retain a cautious attitude towards expansion.

Rising rental and operational costs combined with slower retail sales growth in a number of major markets will see retailers pick and choose locations for new stores carefully. There will be more consolidation of store portfolios and longer lease negotiations.

Chart 1: Average Retail Rental Change (%) Q2 2014

Top-tier luxury brands are consolidating store portfolios in mature markets. Bridge and aspirational fashion brands remain a growth story amid demand for entry-level luxury items from younger shoppers.

20%

The supply pipeline for H2 2014 is significant with around 28 million sq. ft. of new retail supply scheduled to be completed.

Beijing (5.5 million sq. ft.) and Bangkok (5.1 million sq. ft.) account for the majority.

-10%

15% 10%

quarterly % change annual % change

5% 0% -5% Tokyo Shanghai Manila Beijing Taipei Delhi - Connaught Place Shenzhen Jakarta Singapore Bangkok Brisbane Sydney Melbourne Perth Auckland CBD Wellington CBD Delhi - Khan Market Ho Chi Minh City Hanoi Mumbai - Linking Road Mumbai - Colaba Causeway Hong Kong Adelaide

Hot Topics

Source: CBRE Research, Q2 2014. * Source: Tourist arrivals figure covers 12 markets in Asia Pacific including Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, South Korea, Taiwan, Thailand and Vietnam Retail sales figure covers six n markets in Asia Pacific including Australia, China, Hong Kong, Japan, Taiwan and Vietnam

© CBRE Ltd. 2014

ECONOMIC GROWTH PICKS UP BUT RETAIL SALES GROWTH CONTINUES TO SLOW

Consumer confidence in Asia Pacific remained broadly stable in Q2 2014. India saw the biggest improvement in the region as the election of a new government boosted sentiment. However, a few markets recorded declines, led by Hong Kong and Japan. In Hong Kong the slowdown in Mainland Chinese tourist spending has impacted sentiment whilst in Japan the increase in sales tax initially affected consumer confidence. Nevertheless, sound economic fundamentals and positive job prospects will continue to underpin steady domestic consumption demand across the region in coming quarters. Manpower’s Net Employment Outlook indicator for the region stood at 23 for Q3 2014, a stable reading compared to Q2 2014.

2014F

6.0%

2015F

4.0% 2.0% 0.0% World

Asia Pacific

Japan

Thailand

Taiwan

Hong Kong, China

Australia

South Korea

Singapore

New Zealand

India

Malaysia

Vietnam

Indonesia

-2.0%

Source: Oxford Economics, Jul 2014.

Chart 3: Consumer Confidence Index 150 125 100 75 50 25 0 Asia Pacific Global

Consumption sentiment holds steady

8.0%

China

Economic growth in Asia Pacific improved in Q2 2014, mainly on the back of the strong recovery in demand from the West which fed through into higher export growth for the region. However, macro trends diverged slightly among the two largest economies in the region. China saw faster growth as the government took steps to support the economy, with GDP recorded at 7.5% y-o-y this quarter compared to 7.4% y-o-y in Q1 2014. In contrast, growth in Japan stuttered as higher sales taxes impacted business sentiment. Elsewhere, the pace of growth in Australia picked up. New governments in India, Indonesia and Thailand have stabilised the political outlook in these markets. Consensus estimates for regional growth in 2014 have firmed at around 4.6% y-o-y, supported by the ongoing recovery in the developed world.

Chart 2: GDP Growth by Country (%, Y-o-Y)

Philippines

Asia Pacific Retail | MarketView

Economic growth picks up

India Indonesia Philippines China Thailand Hong Kong New Zealand Singapore Vietnam Malaysia Australia Taiwan Japan Korea

Q2 2014

ECONOMIC UPDATE

Index values above 100 indicate an optimistic outlook

Source: Nielsen Global Survey of Consumer Confidence and Spending Intentions, Jul 2014.

Retail sales growth continues to slow

2

The region is expected to see growth of 4.6% in 2014, exceeding projections for growth in the United States and Eurozone. In 2015, stronger growth in markets including India, Indonesia, Singapore, Taiwan and Thailand will offset slightly slower economic expansion in China and Japan.

Monetary policy in the region is expected to tighten slightly due to the tapering of the United States’ Federal Reserve’s quantitative easing program and a mild pick-up in inflation.

20.0%

Apr-13

15.0%

Apr-14

10.0% 5.0% 0.0% -5.0% Thailand

Singapore

Taiwan

South Korea

Japan

Australia

Hong Kong

Vietnam

-10.0% China

Outlook looks positive

Chart 4: Retail Sales Growth (%, Y-o-Y)

Indonesia

Retail sales in Hong Kong and Thailand, which depend relatively more on the tourist trade, declined this quarter despite solid domestic demand. Retail sales growth in China remained stable but figures in tier I cities trailed the rest of the market. In Japan, retail sales declined after the sales tax increase but the negative impact of the tax was weaker than had been expected. Discretionary spending in Australia improved on the back of the strong property and stock market. Total tourist arrivals in 12 countries tracked were up 9.4% y-o-y between April and May. Thailand saw some fallout from political instability with total arrivals down 2.6% y-o-y in April and May.

Source: Statistics departments for various countries, Jul 2014.

Note: Trailing 12-Month average

© CBRE Ltd. 2014

RETAILERS REMAIN CAUTIOUS OVERALL BUT F&B AND FAST FASHION STILL EXPANDING

Retailers in Asia Pacific remained cautious overall in Q2 2014 as slower consumption, higher rents and increased operational costs resulted in limited expansion. Demand is more selective and generally focused on the best spaces in prime high streets and shopping centres.

Despite the overall cautious mood, F&B retailers continue to display strong demand for space in almost every market.

Foreign and domestic groups in this category continue to perform well in China but high-end restaurants are struggling under the impact of the government’s anticorruption campaign. Upmarket F&B operators are introducing mass market brands as they adjust to the change in consumption trends.

Mid-range fashion retailers continue to perform well in most markets and are expanding, albeit with caution as many locations are now well served by their store networks.

Retailers in this category are investing in opening new stores in underpenetrated markets including Australia, Indonesia, the Philippines and Taiwan. During the quarter, UNIQLO’s parent company Fast Retailing announced plans to open 50 stores across Australia by 2017.

Luxury retailers quiet but bridge brands continue to grow Luxury retailers are very cautious with many larger groups undertaking strategy reviews and looking to consolidate store portfolios. During the quarter Tiffany & Co. announced it would open seven new stores in Asia Pacific whilst closing two. Louis Vuitton is expected to close its Northeast China flagship store in Shenyang upon termination of the lease.

Despite the subdued overall picture in this sector, luxury retailers are still active in a few markets. Japan saw renewed interest from top tier brands on the back of improved economic prospects and consumption sentiment. Retailers in this category are also displaying stronger expansionary demand in Australia and Southeast Asia. In Bangkok the Central Embassy mall opened this quarter with over 30 luxury brands including seven new market entrants.

Bridge and aspirational brands – particularly men’s fashion remain a growth story in Australia and China as retailers look to tap into growing demand for entry-level luxury items from younger shoppers.

Consumer electronics stores continue to grow

3

Consumer electronics retailers were in expansion mode this quarter, with Samsung and Sony opening new stores in Bangkok and Manila. Elsewhere, Apple opened a new store in Tokyo and will reportedly open 20 new stores in China between now and 2016.

Many of these stores will be located inside shopping malls rather than standalone locations. Shopping centre landlords are more proactive in introducing new brands and the © CBRE Ltd. 2014

Chart 5: New Leases and Openings by Location 100% 80% 60% 40% 20% 0%

Q1 2014 Prime

Secondary

Q2 2014 Suburban

Asia Pacific Retail | MarketView

F&B and mid-range fashion continue to expand

Q2 2014

MARKET FUNDAMENTALS - RETAILER ACTIVITY

Source: CBRE Research, Q2 2014.

Chart 6: New Leases and Openings by Trade 100% 80% 60% 40% 20% 0% Q1 2014 Luxury and Business Coffee and Restaurants Mid Range Fashion Other

Q2 2014 Consumer Electronics Value and Denim Specialist Clothing Homeware and Department Stores Source: CBRE Research, Q2 2014.

turnover rent system is attractive to retailers. In the street shop segment, high rents and limited availability is impacting leasing demand in a number of locations.

Southeast Asia emerging as hotspot for department stores Traditional department stores continue to struggle in China and Korea but are expanding in Southeast Asia. During the quarter AEON Group and Lotte Group both announced plans to open stores in Jakarta whilst Marks & Spencer intends to enter new markets including Vietnam, Taiwan and Australia.

Other active sectors this quarter included fitness centres.

These groups continue to steadily expand across the region and have been particularly active in China and Singapore of late.

3

RENTAL GROWTH GATHERS PACE; NEW SUPPLY DECLINES BUT PIPELINE IS SIGNIFICANT

Many mature markets saw more cautious expansion by retailers because of slower consumption growth and high operational costs. This dragged on rents, with Hong Kong recording the first decline in prime retail rents since the end of 2008 and rents in Singapore remaining unchanged.

Leasing activity in Southeast Asia and the Pacific was stable and most markets saw average rents remained unchanged.

New completions decline but pipeline is significant New retail supply in Asia moderated to 3.7 million sq. ft. this quarter. With the exception of the 839,592 sq. ft. Beijing Mall, all new supply completed during Q2 2014 was in Southeast Asian markets. Bangkok saw the completion of two major new shopping centres including the 753,480 sq. ft. Central Embassy. Two new retail projects were completed in the Pacific; The Emporium in Melbourne (484,376 sq. ft.) and a portion of 45 Queen Street in Auckland (4,300 sq. ft.).

The supply pipeline in Asia Pacific for H2 2014 is significant with around 28 million sq. ft. of new retail supply scheduled to be completed. Beijing (5.5 million sq. ft.) and Bangkok (5.1 million sq. ft.) account for the majority, most of which is in decentralised areas. New retail supply in key markets in Australia and New Zealand is limited, the largest new addition being the 94,088 sq. ft. Broadway on the Mall in Brisbane.

4

Markets at risk of oversupply include Hanoi and Ho Chi Minh City which will see total retail stock increase by 100% and 33% respectively in the next 18 months. However, leasing demand in these markets is increasing gradually and retail space per capita in Vietnam is still very low.

In Mumbai several developers have responded to the sluggish leasing market by delaying the completion of new projects. Others are considering converting new retail projects currently under construction to residential buildings or other commercial use.

2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

2015

2014

Source: CBRE Research, Q2 2014.

Chart 8: Asia Pacific Retail Rent Index 5%

180

4%

170

3%

160

2%

150

1%

140

0%

130

(Q1 2002 = 100)

Tokyo saw rental growth jump by 9.1% q-o-q as demand strengthened in key retail districts where supply remains limited. Other strong performers included Shanghai (up 2.5% q-o-q), Beijing (up 2.4% q-o-q) and Manila as there continued to be strong demand for quality spaces in key areas - especially units suitable for flagship stores – despite slower overall leasing activity and a weaker appetite for expansion.

Chart 7: Development Pipeline

Tokyo Bangkok Beijing Kuala Lumpur New Delhi Shenzhen Hanoi Guangzhou Shanghai Sydney Singapore Manila Melbourne Jakarta Brisbane Mumbai Ho Chi Minh…

Adelaide Hong Kong Perth Taipei Auckland Wellington

Growth in the CBRE Asia Pacific Retail Rental Index gathered pace to 1.8% q-o-q in Q2 2014, mainly driven by strong growth in Tokyo. However, more caution among retailers impacted rental growth in a number of key markets including Hong Kong and Singapore. Prime rents across the region were largely stable on the back of tight vacancy in core shopping districts.

-1%

120 Quarterly % Change Index (RHS)

-2%

110

-3%

100 2002 Q3 2003 Q1 2003 Q3 2004 Q1 2004 Q3 2005 Q1 2005 Q3 2006 Q1 2006 Q3 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1

Asia Pacific Retail | MarketView

Rental growth picks up speed

Development Pipeline (‘000 sq. m.)

Q2 2014

MARKET FUNDAMENTALS – SUPPLY AND RENTAL MOVEMENT

Source: CBRE Research, Q2 2014.

Chart 9: Strongest Average Rental Growth Y-o-Y 20% 18%

17.6%

16% 14% 12%

9.3%

10%

8.1%

8%

5.6%

6%

5.1%

5.0% 3.1%

4% 2% 0%

Tokyo

Shanghai

Beijing

Taipei

Manila Singapore Asia Pacific Source: CBRE Research, Q2 2014.

© CBRE Ltd. 2014

Q2 2014

MARKET OUTLOOK

OVERALL RENTS TO INCREASE FURTHER BUT AT A SLOWER RATE OF GROWTH Demand set to weaken in second half Overall retailer demand in Asia Pacific will weaken in H2 2014. Retailers in most markets will retain a cautious attitude towards expansion. Rising rental and operational costs combined with slower retail sales growth in a number of major markets will see retailers select locations for new stores very carefully. There will be more consolidation of existing portfolios and the lease negotiation process will take longer. The best spaces in prime high streets and shopping centres will continue to see strong demand but the lack of such space will hinder leasing activity.

Outlook for Southeast Asia and India comparatively upbeat Markets in Southeast Asia remain positive. In Thailand, consumption sentiment has improved following the military coup and the gradual recovery of tourism arrivals will support retail sales and leasing activity in Bangkok. Manila and Jakarta will see further rental growth on the back of robust expansion from value retailers across a number of categories. Rents in Kuala Lumpur and Vietnam will come under pressure from the large volume of new supply but high quality shopping centres will continue to perform well.

Tokyo is the only mature market in Asia expected to see further rental growth this year. Key retail districts in the city continue to see strong demand and intense competition for prime space, a trend that will continue to fuel rental increases in the coming months, although the rate of growth is expected to gradually decelerate. Overall rents in Tokyo are expected to surge by 10 – 15% over the remainder of the year, with secondary areas set to achieve stronger growth.

Asia Pacific Retail | MarketView

continue to focus on their top requirements in proven and mature markets with strong spending patterns. Across the whole market negotiations will take longer as more due diligence is involved. Rental growth in Beijing and Shanghai will weaken whilst Guangzhou and Shenzhen will see rents remain at current levels. Prime locations will see strong leasing demand but rental growth will moderate. Secondary and fringe areas could see a mild rental correction.

Activity is expected to pick up in key cities in India following the election of a stable single party government, which has boosted consumer sentiment. New Delhi will continue to benefit from the influx of international brands and expansionary demand from domestic retailers. Low vacancy in prime shopping centres will provide further support to rental growth in H2 2014. In Mumbai, rents in shopping malls will remain stable but high streets may experience further rental declines.

Hong Kong and Singapore to see quiet second half Among other mature markets, Hong Kong and Singapore will see retailers stay in wait-and-see mode in H2 2014. In Hong Kong expected rental growth in tier I streets for this year has been revised down to flat whilst secondary locations expect to see rental declines of up to 15%.

Singapore expects rents to remain stable but vacancy may increase if take-up in new retail developments remains slow.

In the Pacific, the outlook for major markets in Australia is positive and retailer demand is expected to pick up as the uplift in discretionary spending continues. Rents are bottoming out but growth is unlikely to arrive before 2015.

In key markets in China the outlook remains flat and demand is unlikely to pick up until early 2015. Retailers will Chart 10: Asia Pacific Retail Rental Cycle Q2 2014

Rental Decline Accelerating

Rental Decline Slowing

Rental Growth Accelerating

M Mumbai

S Shenzhen P Perth

5

Hanoi H

Guangzhou Ho Chi Minh City Adelaide Brisbane Sydney Melbourne Wellington

G H A B S M W

NB. Markets do not necessarily move along the curve in the same direction or at the same speed. The rental cycle is intended to display the trend in average rents

Š CBRE Ltd. 2014

Manila M Jakarta J Auckland A

Rental Growth Slowing Beijing Shanghai Taipei Tokyo Singapore New Delhi

Hong Kong H B S Kuala Lumpur K T T S N

5

B Bangkok

Source: CBRE Research, Q2 2014.

Q2 2014

MARKET SUMMARY

PRIME RETAIL RENTS IN HONG KONG DECLINE FOR FIRST TIME SINCE Q3 2008

Asia Pacific Retail | MarketView

City Beijing

Market Highlights • •

Shanghai

• •

Average rents fell -0.4% q-o-q to a near two-year low.

Low net absorption amid limited space in prime shopping centres Mid-range fashion and F&B still active but focusing on prime malls.

Shenzhen

•

Market showed signs of stabilising but leasing momentum remains slow, especially in emerging areas.

Rents up less than 0.1% q-o-q and vacancy down to 10%.

Two new malls scheduled to open this quarter delayed launching due to low occupancy.

• • •

Taipei

• • •

Tokyo

• • •

6

Rental growth rebounded to 2.5% but vacancy surged to 7.3% as a few malls underwent renovations or adjusted their tenant mix.

New supply is limited to the refurbished 188,370 sq. ft. Yangguang Centre on Huaihai Middle Road.

• • •

Hong Kong

Demand remained weak with very few noteworthy leasing deals.

Multi-brand cosmetics and pharmacies – exclusively local groups – continue to account for the bulk of leasing activity.

Prime high street retail rents declined for the first time since the end of 2008.

Rents up slightly by 0.6% q-o-q.

Leasing on high streets remains quiet as retailers prefer shopping centres and department stores.

Mid-range fashion retailers continue to enter/expand.

Firm demand across most sectors amid intense competition for prime space.

More retailers eyeing side streets and rental growth in such areas is expected to pick up soon.

Impact of higher consumption tax has been weaker than expected.

Seoul

• • •

Shoppers are more cautious, value retailers doing well.

Hypermarkets performing strongly but new openings are slowing.

50,600 sq. m. of new space is due in H2 2014 when Parnas Mall and Enter 6 are completed.

Singapore

• • •

Leasing activity was stagnant and average rents were unchanged.

Slower retail sales growth, high rents and rising cost of labour are challenging retailers.

Strong uptick in demand from retail banking after recent regulatory change.

Kuala Lumpur

• • •

Prime and average rents unchanged but uptrend in vacancy continued.

Oversupply still a major concern, particularly in suburban areas.

Rental outlook for well-established malls in core locations is positive.

Manila

• • •

Average rents up by 2.4% q-o-q, vacancy at 4.0%.

International mid-range fashion retailers account for the bulk of expansionary demand.

Landlords very bullish, further rental growth expected.

• • •

Consumer sentiment rebounded after military coup in May. Central Embassy Mall opened with numerous luxury brands.

Rents in prime shopping centres will continue to increase.

Bangkok

Rents

Rental growth moderated to 2.4% q-o-q after reaching a nine-quarter high in Q1 2014. Vacancy stood at 10.8%.

F&B still active but fine dining continues to struggle due to anti-corruption campaign. Traditional department stores are under pressure.

Guangzhou

• •

Demand

Note: Demand and rental arrows represent six month outlook

© CBRE Ltd. 2014

Q2 2014

MARKET SUMMARY

SUBDUED DEMAND IN MUMBAI AS HIGH COSTS DETER RETAILER ACTIVITY Ho Chi Minh City

Market Highlights

• •

Prime rents declined as upscale shopping malls in the CBD repositioned to become more mid-market and family oriented.

Vacancy rose to 11.9% despite no new supply this quarter.

Huge pipeline in decentralised areas will put rents under pressure.

Hanoi

• • •

Shopping centre rents fell 1.8% q-o-q as new projects opened.

Baskin Robbins opens first shop, more overseas F&B names to follow.

New supply means rental outlook is weak despite recent economic recovery.

Jakarta

• • •

New mall Lippo Mall Puri @ The St. Moritz opened in West Jakarta.

Gross rents up by 1.8% q-o-q, prime rents up by 0.4% q-o-q.

Leasing market will remain robust on the back of positive economic prospects and the election of Joko Widodo as President.

New Delhi

• • •

F&B retailers very active for space in shopping malls.

Around 2.5 million sq. ft. of new supply scheduled for H2 2014.

Aerocity and Noida should see leasing activity pick up as new projects are completed from 2015.

Mumbai

•

Retail demand remained subdued as high real estate and other operational costs deterred activity.

Rents in major high streets will stabilise, shopping centres may see a slight increase.

•

• Sydney

• • • • • •

Rents in the CBD remained stable, average vacancy declined to 1.5% The new Emporium and GPO malls are performing very well.

The large pipeline over the next three years means the market will rely on more international retailer arrivals to absorb the new space.

Perth

•

Rents and incentives in CBD were unchanged. Vacancy remained tight but was masked by the re-emergence of pop-up stores.

Leasing activity is expected to improve in H2 2014 and rents will remain relatively stable.

Brisbane

• • •

Landlords held face rents firm but offered more incentives.

Demand for prime locations driven by F&B and international fashion groups.

New supply is mostly refurbishment from landlords looking to accommodate demand for flagship stores from international retailers.

Adelaide

• • •

Contraction in average rents moderated to 0.4% q-o-q.

Leasing demand slowed as domestic fashion retailers consolidated.

Short term rental outlook is brighter but further contraction is expected to be driven by softer demand for secondary locations.

Auckland

•

Prime rents were flat. Availability in prime CBD strips expected to tighten due to strong enquiries from Australian chained clothing and footwear retailers.

Improved consumer confidence expected to drive further growth in retail spending this year.

• 7

Wellington

• •

Subdued core retail sales growth and consumer confidence resulted in limited leasing activity.

Retailers will stay cautious and prime rents are expected to remain stable.

Note: Demand and rental arrows represent six month outlook

© CBRE Ltd. 2014

Rents

Steady demand from international retailers positioning to secure prime locations to capitalise on the expected economic upswing.

F&B, luxury and mid-range fashion all active.

Rents remained stable. Stronger retail sales may take more than 12 months to translate into rental growth.

Melbourne

•

Demand

Asia Pacific Retail | MarketView

City

7

Q2 2014

KEY INDICATORS

Asia Pacific Retail | MarketView

Table 1: Shopping Centre Prime Retail Rents Country

City

Local rent currency and measurement

Prime Rent (Local currency and measurement)

Prime Rent (US$ psf/ annum)

Last 3 Months q-o-q (%)

Last 12 Months y-o-y (%)

China

Beijing

RMB sq. m. p. d.

122

664

0.0

0.0

China

Shanghai

RMB sq. m. p. d.

95

518

0.0

5.6

China

Guangzhou

RMB sq. m. p. d.

107

584

0.0

0.0

China

Shenzhen

RMB sq. m. p. d.

59

323

0.0

5.9

Malaysia

Kuala Lumpur

RM sq. ft. p.m.

150

560

0.0

0.0

Philippines

Manila

PHP sq. m. p.m.

1,490

38

2.1

6.4

Singapore

Singapore

S$ sq. ft. p.m.

51

489

0.0

4.5

Thailand

Bangkok

THB sq. m. p.m.

3,100

116

0.0

0.0

Vietnam

Ho Chi Minh City

US$ sq. m. p.m.

170

190

-15.0

-15.0

Vietnam

Hanoi

US$ sq. m. p.m.

120

139

0.0

-4.0

India

New Delhi

INR sq. ft. p.m.

1,200

240

0.0

9.1

India

Mumbai

INR sq. ft. p.m.

625

125

0.0

-3.8

Source: CBRE Research, Q2 2014.

Table 2: High Street Prime Retail Rents Country

City

Local rent currency and measurement

Prime Rent (Local currency and measurement)

Prime Rent (US$ psf/ annum)

Last 3 Months q-o-q (%)

Last 12 Months y-o-y (%) 0.0

China

Hong Kong

HK$ sq. ft. p.m.

2,800

4,335

0.0

Taiwan

Taipei

NT$ sq. m. p.m.

11,253

387

0.0

0.6

Japan

Tokyo

JPY tsubo p.m.

300,000

999

9.1

17.6

India

New Delhi

INR sq. ft. p.m.

1,500

299

0.0

7.1

Australia

Sydney

A$ sq. m. p.a.

10,475

918

0.0

0.0

Australia

Melbourne

A$ sq. m. p.a.

8,800

771

0.0

0.0

Australia

Adelaide

A$ sq. m. p.a.

4,400

386

0.0

10.0

Australia

Brisbane

A$ sq. m. p.a.

6,645

583

0.0

0.0

Australia

Perth

A$ sq. m. p.a.

3,600

316

0.0

0.0

New Zealand

Auckland

NZ$ sq. m. p.a

3,559

289

0.0

0.0

New Zealand

Wellington

NZ$ sq. m. p.a

2,399

195

0.0

0.0

Source: CBRE Research, Q2 2014.

Note: The prime retail rents represent the typical “achievable” open market headline rent which an international retail chain would be expected to pay for a ground floor retail unit (either high street or shopping centre depending on the market) of up to 200 sq.m. of the highest quality and specification and in the best location in a given market. The quoted rents reflect the level at which relevant transactions are being completed in the market at the time but need not be exactly identical to any of them, particularly if deal flow is very limited or made up of unusual one-off deals. In these circumstances, the quoted figure will be more hypothetical, based on expert opinion of market conditions, but the same criteria on building size and specification apply. The figures exclude any leasing incentives or “key money” (premium, or initial payment, to secure the right to occupy the unit).

8

Local currency rents for certain markets are expressed in terms of Zone A (ITZA), an approach which places a higher value on certain parts of a shop more than others. The number reported is the value placed on the most expensive part of the shop and will therefore be much higher than the average per sq m value for the entire unit.

© CBRE Ltd. 2014

Q2 2014

RETAIL TRANSACTIONS AND NEW DEVELOPMENTS

Market

Development Name

Size (sq. ft.)

Occupier

Retail Sector

Retailer Country Origin

Indonesia, Jakarta

Lipppo Mall Puri @ The St. Moritz

179,959

Parkson

Homeware and Department Store

Malaysia

Hong Kong

Queen’s Road Central

55,000

ZARA

Mid - Range Fashion

Spain

Japan, Tokyo

Apple Store Omotesando

21,470

APPLE

Consumer Electronics

United States

China, Shanghai

Mall 818

18,300

Old Navy

Mid - Range Fashion

United States

Australia, Sydney

Pitt Street Mall

15,985

UNIQLO

Value and Denim

Japan

Asia Pacific Retail | MarketView

Table 3: Selected Leasing Transactions in Q2 2014

Table 4: Key Retail Developments in 2014 Country

9

Market

Submarket

Development Name

Expected Date of Completion

Estimated size (sq. ft.)

China

Beijing

Others

Inter IKEA

Q4 2014

2,260,421

China

Shanghai

Xintiandi

Yangguang Centre

Q4 2014

188,370

China

Guangzhou

Pearl River New City

Seasons Mall – Winter

Q4 2014

1,044,108

China

Shenzhen

Futian

Century Palace Shopping Centre

Q3 2014

635,076

Taiwan

Taipei

Xinyi Planned Area

Breeze Song-gao

Q4 2014

142,333

Japan

Tokyo

Ginza

KIRARITO GINZA

Q4 2014

178,457

Singapore

Singapore

Downtown Core

Marina Square (Retail Extension)

Q4 2014

200,000

Thailand

Bangkok

CBD

The Equartier

Q3 2014

538,200

Malaysia

Kuala Lumpur

Suburban

IOI City Mall

Q4 2014

1,350,000

Vietnam

Hanoi

Non-core

Vincom Mega Mall (Times City) (Phase 2)

Q4 2014

107,639

Vietnam

HCMC

CBD

Times Square

Q4 2014

34,444

The Philippines Manila

Pasig City

Estancia

Q3 2014

226,042

Indonesia

Jakarta

Secondary

Lippo Mall @ Holland Village

Q4 2014

601,858

India

Mumbai

Worli

Century Greenspan

Q4 2014

90,000

India

New Delhi

Noida

DLF Mall of India (NOIDA)

Q3 2014

1,650,000

Australia

Brisbane

CBD

Broadway on the Hall

Q4 2014

94,088

Australia

Melbourne

CBD

Scots Church

Q3 2014

21,528

Australia

Sydney

CBD

Barangaroo South Commercial Building

Q3 2014

75,456

New Zealand

Auckland

Core

SugarTree Stage 1

Q4 2014

21,528

© CBRE Ltd. 2014

9

Q2 2014

CONTACTS For more information about this Regional MarketView, please contact:

Asia Pacific Retail | MarketView

APAC Research Henry Chin, Ph.D. Head of Research, Asia Pacific CBRE 12/F Three Exchange Square 8 Connaught Place Central, Hong Kong t: +852 2820 8160 e: henry.chin@cbre.com.hk

Jonathan Hsu Director, Asia Pacific CBRE 12/F Three Exchange Square 8 Connaught Place Central, Hong Kong t: +852 2820 2957 e: jonathan.hsu@cbre.com.hk

Liz Hung Manager, Asia Pacific CBRE 12/F Three Exchange Square 8 Connaught Place Central, Hong Kong t: +852 2820 6557 e: liz.hung@cbre.com.hk

For more information regarding Global Research and Consulting activity, please contact: Nick Axford, Ph.D. Global Head of Research Global Research and Consulting t: +44 (0) 7557 896 889 e: nick.axford@cbre.com Follow Nick on Twitter: @NickAxford1

Richard Barkham , Ph.D., MRICS. Global Chief Economist Global Research and Consulting t: +44 20 7182 2000 e: richard.barkham@cbre.com

Neil Blake, Ph.D. Head of Research, UK and EMEA Global Research and Consulting t: +44 20 7182 2133 e: neil.blake@cbre.com Follow Neil on Twitter: @neilblake123

Henry Chin, Ph.D. Head of Research, Asia Pacific Global Research and Consulting t: +852 2820 8160 e: henry.chin@cbre.com.hk

Raymond Wong, Managing Director, Americas Research Global Research and Consulting t: +1 416 815 2353 e: raymond.wong@cbre.com

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Global Research and Consulting This report was prepared by the CBRE APAC Research Team which forms part of CBRE Global Research and Consulting – a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe.

Disclaimer

10

All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information purposes only, exclusively for CBRE clients and professionals, and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without prior express written permission of CBRE. Any unauthorised publication or redistribution of CBRE research reports is prohibited. CBRE will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on information in this publication.

Š CBRE Ltd. 2014