Hong Kong May 26, 2014 — Within Asia Pacific China remains the top priority for retailer expansion in 2014, while emerging markets in Southeast Asia are also attracting stronger attention, according to the latest edition of How Active are Retailers in Asia Pacific by global property advisor CBRE.
The report, now in its second year, highlights that 64% of respondents plan to open a new store in China this year. This is well ahead of Vietnam, Hong Kong and Singapore, which rank equal second with 33% of retailers planning new store openings in these markets.
“Despite slower economic growth, China continues to grow at a rapid pace and is luring international retailers looking to tap into booming consumer spending and a growing appetite for western fashion products and services. Consumer sentiment remains the highest in the world and retail sales growth is expected to reach 13.4% in 2014. Retailers continue to view this market as having significant upside potential as the government plans to further boost domestic consumption and double household income by 2020,” said CBRE Director, Asia Pacific Research, Jonathan Hsu.
By city, retailers are displaying a strong preference for expansion in Greater China and Vietnam. Beijing and Shanghai—the cities where 30% of China’s millionaires are based—top the list with 36% of retailers planning to open stores in these locations this year.
Three cities in Vietnam also rank in the top 10—highlighting growing retailer interest in South East Asia’s emerging economies, including Vietnam, Indonesia, the Philippines and Thailand, given their growing middle class, rising incomes and appetite for western consumer goods.
“Vietnam has seen a steady flow of new overseas retailer entrants in recent years, including the likes of Starbucks and McDonald’s. This trend is expected to gather pace as other retailers position themselves to enter this market following the relaxation of foreign direct investment for wholly-owned businesses, which takes effect in 2015,” said Sebastian Skiff, Executive Director of CBRE Retail.
CBRE’s analysis covers 11 key Asia markets—China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand—and Australia and New Zealand in the Pacific region.
Half of the retailers surveyed rate current opportunities to expand as being excellent or good, backed by the expectation that Asia Pacific will outperform other major economic regions in 2014 and that private consumption demand will continue to grow, albeit at a slower pace.
However, there was a significant divergence in the outlook for Asia versus Pacific, with 74% anticipating good to excellent expansion opportunities but only 32% expecting the same in the Pacific.
Mr Skiff attributed the contrast to the relatively smaller market sizes of Australia and New Zealand. However, he said retailer attitudes were changing as leading global retailers, particularly those in the value fashion sectors, entered the Pacific market.
Other report highlights include:
Retailers are displaying a stronger appetite for expansion in Asia, with around 32% of survey respondents planning to open more than 20 stores in the region in 2014.
Retailers cross the various fashion categories and Coffee & Restaurants have the most ambitious expansion plans. Of the fashion retailers looking to open more than 30 stores this year, Value Fashion and Mid-Range Fashion are the most active.
Shopping centers remain the preferred retail format as they provide organized and modern retail space and stable foot traffic
Overseas retailers are targeting different markets from those based in Asia Pacific. Retailers from North America and the Eurozone are keener to expand in developed cities such as Hong Kong, Singapore and Thailand, while Asia Pacific retailers display a stronger interest in emerging Southeast Asian markets such as Vietnam, Malaysia and Indonesia.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
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