Retail Cities in Asia Pacifc The new retailers in town joneslanglasalle.com/asiapacifc
Oct 18, 2015
Retail Cities in Asia Pacific The new retailers in town
joneslanglasalle.com/asiapacific
The retail sector in Asia Pacific is witnessing rapid change and one of the driving forces is the aggressive expansion of international retailers throughout the region. Our second edition of Retail Cities in Asia Pacific highlights many of these new market entrants together with other trends shaping the retail landscape.We hope you enjoy it. Dr Jane Murray Head of Research Asia Pacific
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Contents
Making Mall Marketing Interactive
Redefining a Retail Network
Retail Track Record
Market Statistics
Is Shopping Centre Ownership Going Global?
City Profiles
10 Hong Kong11 Beijing12 Shanghai13 Guangzhou14 Tokyo15 Singapore16 Bangkok17 Jakarta18 Delhi19 Mumbai20 Sydney21 Melbourne
Hong Kong Beijing Shanghai Guangzhou Tokyo Singapore Bangkok Jakarta Delhi Mumbai Sydney Melbourne
7.1 15.6 20.2 10.8 37.2 5.2 8.4 9.8 22.7 19.7 4.5 4.0
AsiaPacificisalsohometosomeoftheworlds wealthiestnations,withAustralia,HongKong, SingaporeandJapaninthetop30intermsofper capitaincome.
Internationalluxuryandmid-rangeretailersare aggressivelygrowingtheirbusinessesinthese rapidlytransformingmarkets.
Withrisingaffluencecomeslargescale developmentofretailstock.Acrosstheregions majorretailmarkets,primeretailstockcurrently sitsat80millionsqmandisforecasttoriseby another55millionsqminthenextfiveyears.Of this,20%willbebuiltinAsiasTierImarketsand astaggering75%or40millionsqmintheTierII marketsofChina.
Nominal Retail Sales (Y-o-Y % Growth)
Total Stock (mil sqm) as at end-2012 2013 to 2017 New Supply Additions as % of Stock
Retail Investment Trends Astheretailsectorgrowsandmatures,realestateinvestorsinAsiaPacificareincreasinglyfocusingonretailassets.In2012,USD22.8billionofretailpropertywastransacted acrosstheregion.
ThetopretailinvestmentdestinationsarecurrentlythematuremarketsofHongKong,JapanandAustralia.Inthecomingyears,wepredictthatinterestintheregionsemerging marketswillcontinuetogrowandChinawillbecomeAsiaPacificsnumberoneretailinvestmentdestinationby2020.
JustoverhalfoftheworldspopulationlivesinAsia Pacific.Thatis3.8billionpeople,ofwhich1.7billion currentlyliveincities.
Theregionsurbanpopulationissettoriseto 2billionbytheendofthedecade.Combinethat withrapideconomicgrowthinmanycountriesand theresultisameteoricriseinwealthlevels.
2011 Population (mil)
9.1% 11.9% 9.0%-1.1%
16.7%
TheJonesLangLaSalleAsiaPacificResearchteamprovidesin-depthcoverageof42retailmarketsin11countries.
+64%
1.77.5
+46%
4.5
+28%
3.6
+3%
n/a
Hong Kong Beijing Shanghai Guangzhou Tokyo Singapore Bangkok Jakarta Delhi Mumbai Sydney Melbourne
7.1 15.6 20.2 10.8 37.2 5.2 8.4 9.8 22.7 19.7 4.5 4.0
03MarketStatistics
Market Statistics
SourcesCityPopulation:WorldUrbanizationProspects,UnitedNations:The2011RevisionRetailsales:variousgovernmentwebsitesRetailstockandsupplyadditions:JonesLangLaSalle(RealEstateIntelligenceService),4Q12
Notes Retailsalesgrowth:BangkokreferstoThailand,Sydney(NewSouthWales)andMelbourne(Victoria).FullyearfigureforShanghai,Decemberfortherest.Stock/supplyfiguresrefertoprimeretailcentresforAsiancitiesandregional/sub-regionalcentresforAustraliancities.
-1.5%22.6% 14.9%
n/a n/a 0.9% -0.3%
+15%
1.8
+19%
1.71.9
+22%+6%
3.02.1
+39% +12%
2.5
+43%
1.3
Making Mall Marketing InteractiveThe creative application of modern technology offers new opportunities for engaging customers and building marketing partnerships.
05MakingMallMarketingInteractive
Shoppingcentreshavealwaysbeenuniquevenuesforconnectingbrandsandconsumers.Today,advancesinmobiletechnologyarediversifyingthenatureofthatrelationship.Ownerscannowconsidertheirretailassetasbothatheatreofexperientialinteractionandasocialmediaplatform.
DuringChristmas2012,shoppersattwoMosaicmalls,anewretailcentreconceptthatisbeinglaunchedacrossChina,werepresentedwithanewformofmarketingpromotioninteractivevideogames.IntheMosaicDalianMallandMosaicChangshaMall,theinitiativedrewsizeablecrowdsofshopperseagertoparticipate.
Largescreenswereerectedinprominentpositionsandcustomerswereinvitedtotakepartinalivevideogamecontrolledviatheirmobilephones.Shoppers,whoparticipated,shotfireworksontoascreentotargetvariousmovingprizes.Uponwinningaprize,competitorscompletedashortsurveyontheirphoneandmallstaffdistributedthegift.
Forparticipants,theimmediateactivationusingascannedQRcodeandmulti-uservideogameformatmeanttheydidnothavetowaitinlinetoplay.Viralappealwasalsocreatedbytheremotecontrolnatureofthegame,asplayersinvitedfriendsandcolleaguesbySMSmessagestocomeandjoinin.
Theobjectiveofinteractivepromotionslikethisistodifferentiateamallinanincreasinglycompetitiveenvironmentandextractmorevaluefromthecommonareasofamall,saysMarcusDee,AssociateDirector,RetailAssetManagement,GreaterChina,JonesLangLaSalle.Entertainingshoppersaddsrealvaluetotheirexperience.Forowners,itcreatesnewadvertisingchannelsandbrandpartnershipopportunities,plusthecapabilitytocollectconsumerdatainanon-invasiveway.
InteractivemarketingiswellsuitedtoAsiaPacific,wheremallsarepopularleisuredestinationsandtechnologyadoptionratesarehigh.China,forexample,isnowtheworldslargestmarketforactiveAndroidandiOSsmartphonesandtablets,accordingtoa2013reportbyresearchfirmFlurryAnalytics,makingtheiruseevenmorerelevanttothemallindustry.
Thetrendhasglobalroots.In2009,afterthefinancialcrisis,shoppingmallsintheUnitedStatesbeganlookingfortechnology-basedmechanismstoengageshoppers.Multimediaandgamingeventsgrewinpopularitybecausetheycanbetailoredtoeachmalllayout.Appliedsoftwareenablesownerstoupdateadsandpromotionsinrealtimeandgarnerkeydata,whilecustomersenjoythecompetitionandpost-gamescorerankings.
TheSanFrancisco-basedInternationalExperientialMarketingAssociation(IEMA)believestechnologicallyenlightenedandempoweredconsumersnowdesireexperiencesthatarepersonallyrelevant,memorable,sensory,emotionalandmeaningful.TheIEMAsaysmarketingthatengagespeoplewithindividualexperiencesthathavetangiblebenefitsisafundamentalbasisforthefutureofmarketingstrategy.
MichaelYuann,founderofShanghai-basedGameConcourse,whichdevelopedthesoftwareforthegamingeventsinDalianandChangsha,believestheopportunitiesforinteractivemallmarketingarestillintheirinfancy.
Thisisanewfrontier,bothforthesoftwareandgamingindustriesandmallowners,thatridesonthetailsofsocialnetworkapplications,saysYuann.Totheuser,theobjectiveissimple:entertainment.Buttherangeofinteractiveadvertisingandmarketingcapabilitiesbeingopenedupmakethistypeofpromotionsoattractive.
GameConcourseaimstorolloutnewgameformatsindifferentmalllocations,andisworkingwithJonesLangLaSalleonthenextgenerationofconsumerinteraction.Wewanttouseinteractivemarketingtoaddevengreatervalueformallowners,saysMarcusDee.
Thenewprojectwillembedseveraldisplayscreensinmallsthatcustomerscanconstantlyinteractwithastheyarewalkingthroughthepublicareas.Inthisway,itspossibletograduallygatherdatathatbuildspicturesaboutconsumerbehaviourandbuyinghabits.Thisinformationcanbeusedtodrivenewmarketinginitiatives,saysDee.Atthesametime,interactiveadvertisingcontentcangenerateextrarevenueandhelpbuildpartnershipsbetweenmalls,brandsandoutsidesponsors.
The objective of interactive promotions like this is to differentiate a mall in an increasingly competitive
environment and extract more value from the common
areas of a mallMarcus Dee
Associate Director, Retail Asset Management, Greater China Jones Lang LaSalle
Is Shopping Centre Ownership Going Global?Retail property investors are eyeing opportunities beyond their core markets, and the fast-growing economies of Asia Pacific are top of the shopping list.
JonesLangLaSallesoldthedebtsecuredoverTopRydeCity(Sydney)forUSD359milliontoBlackstoneonayieldof7.3%.
07IsShoppingCentreOwnershipGoingGlobal?
Theglobalisationofretailbrandsinrecentyearsishelpingtoreshapethewayownersandoperatorsofretailpropertybehave.WesternretailersarecontinuingtoextendtheirreachtotapintostrengtheningconsumerdemandacrossAsiaPacific,withsalesgrowthoftheirAsianportfoliosfrequentlyexceedingtheirhomemarkets.Thistrendisnotjustoneway;first-moverAsianbrandsaresimultaneouslyenteringmatureretailmarketsbeyondtheregion.Astheseambitiousretailersembracetransnationalopportunities,willtheownersandoperatorsofshoppingmallsfollowsuit?
ThestrengthandunderlyinggrowthprospectsofretailmarketsinkeyAsianeconomiesisattractiveforinvestors.JonesLangLaSallesGlobalCapitalFlowsresearchillustratesthatinternationalcapitalisbeinginvestedtotakeadvantageofprojectedgrowth.Since2010,approximately35%ofthetotalUS$65bnofretailtransactionsinAsiaPacificwasundertakenbynon-domesticparties,ofwhich29%wascomprisedofbuyersfromoutsidetheregion.Thisinvestmenthaslargelytakentheformofinternationalfundspartneringwithdomesticorregionaldevelopersandowners.
GivenAsiasongoingretailsectorboomandtheinternationalisationofretailersandcapital,agreaterpushintotheregionbymajorretailpropertyoperatorsmayhavebeenexpected.Whilsttheglobalheavyweights,suchasLendLeaseandSimonPropertyGroup,dohaveapresenceinAsia,itissmallrelativetothemarketandeachoftheirrespectiveportfolios,yetWestfieldisconspicuousbyitsabsence.
TheprimarychallengesforspecialistoperatorsenteringAsiaPacificmarketsincludethedifficultyinaccessingappropriatestock,regulatoryrestrictions,findingappropriatelocalpartners,thehighcostofsettinguplargelocalteamstomanageahandsonrealestatesectorandtherequiredcriticalmassofmallstojustifyhighset-upcosts,saysDavidRaven,RegionalDirectorofRetailInvestment,AsiaPacificCapitalMarkets,JonesLangLaSalle.TherelativepricingofAsianmarkets,thecapitalstructuresoftheseoperatorsandthesheerweightofcapitalrequiredarealsoinhibitingfactors.
Despitethesechallenges,itswidelybelievedthattheexperienceandexpertiseofglobalretailoperatorscouldbenefitcertainmarketsintheregion.ThesegroupsarealsoobservingtheapproachesofexperiencedAsiandevelopers,suchasCapitaLand,SMGroup,SwireandLippo,whohavesuccessfullydevelopedretailassetsacrossborderswithintheregion.
Evolvingmarketdynamicscouldcatalyseactivitybylargeretailoperators.AsthedevelopmentpipelineinmostAsiancountriesisdelivered,greatercompetitionwillexistbetweenmalls.Heightenedcompetitionwillgiveconsumersextrachoiceandhighlightthedifferencesbetweentheleadingandlesssuccessfulmallsineachmarket.Overtime,thiswilldrivetherequirementforspecialistrepositioningandmanagerialskillstoachieveandmaintainsuccess.
Asmarketsmatureacrosstheregion,shoppingcentresdevelopedorrepositionedbyexperiencedretailspecialistsareexpectedtooutperformthecompetition,saysDavidRaven.Weforeseeanincreasingtrendofassetlevelstrategicjointventuresbeingestablishedbetweenownersandoperatorswithinternationalretailexpertiseandrelationshipswithbothglobalretailersandglobalcapital.
AsiaPacificsfastestgrowingmarkets,suchasChina,offerconsiderablescopeforretailassetpartnerships.Othercountriesarealsoattractinginterest.LendLeasesrecentannouncementthatitispartneringwithMalaysiandeveloperSPSetiatoopentheSetiaCityMallnearKualaLumpurin2013couldbeasignofthingstocomeacrosstheregion.Itisexpectedthatglobalretailoperatorscoulddeliversuperiorreturnsforinvestorsandpartnersthroughleveragingtheirrelationshipswithinternationalretailers,operatingmallswithgreaterefficiencyandutilisingtheirspecialistexperienceindesigningandrepositioningmalls.GrowingapresenceintheregioncouldalsostrengthenrelationshipswithambitiousAsianbrandsthatcanbeexportedtotheglobaloperatorscoreportfolios.
As markets mature across the region, shopping centres
developed or repositioned by experienced retail specialists
are expected to outperform the competition.
David RavenRegional Director of Retail Investment, Asia Pacific Capital Markets
Jones Lang LaSalle
Redefining a Retail NetworkThe increasingly competitive nature of retail real estate in Asia Pacific means acquiring desirable sites can be a challenging process.
09RedefiningaRetailNetwork
TheevidenceofAsiaPacificsconsumerboomisaroundus.Retaildevelopmentisgalvanisingmanycitiesandmultiple-channeladvertisingbombardsconsumers.Tomeetdiversifyingdemand,globalanddomesticretailersaredevisingstrategiestoenhancetheirmarketpenetration.Butwhetherabrandisrollingoutnewstoresoradaptingformatstomeetchangingmarketcontexts,retailnetworkplanningisanevolvingprocess.
TherearecertainkeysupplysidechallengesinAsiaPacificthatimpactretaildecisions,particularlyincentrallocations.Theseincludeshoppingcentrewaitinglists,risingrents,short-termleases,lackofsecurityoftenure,highfit-outcostsandcapitaldepreciation,saysIainMackenzie,HeadofSolutionsDevelopment,AsiaPacific,JonesLangLaSalle.Thesefactorsarecontributingtothecomplexityofshapingaretailnetwork.
US-basedlifestylebrandTommyBahamaenteredAsiaPacificwithfouroutletsinAustralia,andin2012openeddebutstoresinMacau,HongKongandSingapore.TokyoandYokohamawillfollowin2013.Abigchallengehasbeenfindingsufficientspace.IntheUnitedStates,ouraveragestoresizeis3,000-4,000squarefeet.InAsia,ourminimumrequirementis2,500squarefeet,butthatishardtoachieveasmallunitsaresmaller,saysRaymonddeMalherbe,SeniorManagingDirector,TommyBahamaInternational.
Asanewbrandtotheregion,itisfocusingonhigh-trafficlocations.WeneedspacesthatenableustopositionourselvessotheTommyBahamalifestylecanbeeasilyunderstoodandenjoyed.Weinvestalotoftimeandeffortinourwindowandstoredisplaystopresentourproductlines,saysBrianPearce,ManagingDirector,TommyBahamaAsia.
Storeformatalsoinfluencesthelocation.TommyBahamasstoreinWanchai,HongKongsellsmensandwomensapparelandhomeaccessoriesandfeaturesabarandcaf,andtheGinzaretailstoreinTokyowillincludetwobarsandarestaurant.TheHongKongretailandbarconceptisaprototype,andwewouldliketodomoreofthose,saysPearce.Thisformatisbettersuitedtoastreetlocation,butaswebecomemoreestablishedwewanttohavemultiplestoresinkeycities,andwillcreateformatstofiteachlocation.
Withanestablishedpresencein22countriesacrossAsiaPacific,thechallengesfacingStandardCharteredBankaredifferent.Asthebankingindustryrespondstorapidchangesintechnologyandconsumerbehaviour,retailbanknetworksareassumingadifferentrole.
Thebankingindustryisverydynamic,andbanksarechangingtomeettheneedsofmarkets,consumersandregulators.Retailbanksnowarefocusedonsalesandincomenotjustservice,sothereisaneedtorepositionandresizetocreatenetworkassetsthathaveaninterconnectionwitheachother,saysDavidRees,HeadofProjectManagementandDesign,GroupRealEstate,StandardCharteredBank.
Asianconsumersaremovingtowardsdebitandcreditandawayfromcash,andinsomecountriesmobilemoneyenablingfundstobetransferredusingmobilephonesisgainingtraction.Consequently,thelong-heldnotionofabankbranchofferingtellersandATMsisbeingchallenged.Newbankformatshaveafocusoninteractivetechnologyandadviceandconsultancyservicesratherthantraditionaltellertransactions,saysRees.
Locationdecisionsarebeingreassessedaccordingly.Forthespaceswewant,whicharetypicallybetween1000-1500squarefeet,wearecompetingwithconsumerbrandsthatsellalotofproduct,saysRees.Sowemustbenchmarkourbranchneedsagainstbrandsthatcanmovequickly,ratherthanagainstotherbankswhomustseekthesameregulatoryapprovalsaswedobeforeopeningabranch.
There are certain key supply side challenges in Asia Pacific
that impact retail decisions and contribute to the complexity
of shaping a branch retail network. These factors include
shopping centre waiting lists, rising rents, short-term leases,
lack of security of tenure, high fit-out costs and capital depreciation,
Iain Mackenzie Head of Solutions Development, Asia Pacific
Jones Lang LaSalle
Abercrombie&FitchAlexanderMcQueenBlackFleecebyBrooksBrothersBreitlingCosForever21HackettHollisterTommyBahamaVeraWang
New RetaileRs iN 2012
Hong Kong
Note:HongKongRetailreferstoHongKongsoverallPrimeShoppingCentreandHighStreetretailmarkets.Source:JonesLangLaSalle
Asset PerformAnceHIGH STREET SHOP RENTS RISE
HighStreetshoprentsgrewby2.4%q-o-qin4Q12.
SECONDARY LOCATIONS SEE STRONGER DEMAND
Highrentsincoreareascontinuedtodriveleasingdemandintofringestreetsandnon-coreareas;rentsinoverallprimeshoppingcentresincreasedby2.1%q-o-qin4Q12and1.8%q-o-qinpremiumprimeshoppingcentres.
CAPITAL INFLOWS LIFT TRANSACTION VOLUMES
Investmentactivitypicked-upnoticeablyin4Q12onthebackofcapitalinflowsarisingfromfurtherstimulusintheUSandtheannouncementofmoreausteritymeasuresinthecitysresidentialsector.
12 montH oUtLooK
RetailsalesareexpectedtobewellsupportedbythesustainedgrowthinMainlandChinesevisitorarrivals,whichgrewby24.2%y-o-yin2012.
MAINLAND CHINESE VISITORS TO SUPPORT RETAIL SALES
Astrongergrowingdomesticeconomyshouldlendsupporttothecitysretailingmarketin2013.
IMPROVING ECONOMIC OUTLOOK
MODERATE GROWTH EXPECTED IN RETAIL RENTS
ThechangingprofileofMainlandChinesetouristsislikelytoresultinmoremoderateretailsalesgrowth.Assuch,weexpectretailrentstorisein2013albeitatamoremoderatepace,intherangeof0-10%.
finAnciAL indices
demAnd
sUPPLy
Sales growth of 9.8% in 2012 suggests Hong Kongs retail sector is in vibrant health. One of the worlds premier shopping destinations, Hong Kong is a magnet for global brands targeting affluent local shoppers and tourists, especially from Mainland China. Many retailers now view their city flagships as showrooms for expanding into China. Luxury brands and high-street stores are locked in competition for prime sites at The Landmark, Harbour City, Times Square and ifc malls, plus high-traffic locations on Queens Road in Central and Canton Road in Tsimshatsui. Continued rental growth in downtown Hong Kong has resulted in an overspill into previously non-core areas. Clusters of luxury and fashion brands are emerging on Wellington Street in Central, Johnston Road in Wanchai and Peking Road in Tsimshatsui, while fashion retailers are also moving into malls in decentralised areas like Shatin and Tuen Mun.
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
14610 99 29 76 24
VCity,anew269,000sqftshoppingcentreinTuenMunwascompletedin4Q12andisscheduledtoopenin2Q13.
Anon-primeshoppingcentreinRepulseBay,ThePulse(147,693sqft),completedin4Q12andisscheduledtoopenin1Q13.
Retailsalesgrowthimprovedin4Q12,rising7.6%y-o-ycomparedwith5.8%y-o-yin3Q12.
Growthintouristarrivalsmoderated,downto15.1%y-o-yin4Q12from17.7%growthrecordedin3Q12.
Primeshoppinglocationscontinuedtodrawconsiderableinterestfromluxuryinternationalbrands.
RENTAL INFORMATION
High Street ShopsRental Value^ HKD 709.3 psf pm
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 15
^net,onGFA
Overall Prime Shopping CentresRental Value^ HKD 149.6 psf pm
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 13
^net,onLFA
12-MONTH OUTLOOK
Rental ValueHighStreetShops
Capital ValueHighStreetShops
4Q 08 4Q
09 4Q
10 4Q11 4Q12
240
200
280
160
120
80
RVIndex(PremiumPrimeShoppingCentres)
RVIndex(HighStreetShops)
RVIndex(OverallPrimeShoppingCentres)
CVIndex(HighStreetShop)
IndexBase4Q08=100
LEASING TRANSACTIONS INVESTMENT TRANSACTIONSLongchamp8,000sqft,SilvercordGAP 15,800sqft,MPMBreitling10,000sqft,517-519HennessyRoad
Park Hotel Shopping Arcade(70,000sqft)inTsimshatsuisoldforHKD2.2billionKatherine House(49,500sqft)inTsimshatsuisoldforHKD780millionLaguna Plaza(163,611sqft)inLamTimsoldforHKD1.5billion
NOTABLE DEALS IN 2H12
4Q 2012 Highlights10RetailCities|HongKong
AlexanderWangAmericanApparelBakerCosForever21HarmanHollisterPatagoniaSpringfieldToysRUs
New RetaileRs iN 2012
Beijing
Note:BeijingRetailreferstoBeijingsUrbanPrimeretailmarket.Source:JonesLangLaSalle
Asset PerformAnceSTRONG RETAILER EXPANSION
Retailsalesincreased11.9%y-o-yinDecember.Retailersmaintainedastrongpaceofexpansionthroughout2012.
LANDLORDS FOCUS ON IMPROVING TENANT MIXES
Experiencedlandlordsexecutedmoreeffectiverentrevenuestrategiesbyimprovingtheirtenantmixes.Theyreplacedlow-profit-margintenantswithtenantswithalimitedpresenceinothermallstodifferentiatethemselves.
CORE & URBAN MARKET RENTS RISE
Atend-2012,averagerentsintheurban&coremarketsrose8.7%&10.1%y-o-y,respectively.
12 montH oUtLooK
Averageneteffectiverentswillcontinuegrowingatadoubledigitratein2013.
RENTAL GROWTH LIKELY SIMILAR TO 2012
Areboundinretailsalesisexpectedin2013inlightofimprovingmacro-economicdata,fallingcreditcardfeesandlowertariffsonimportedgoods.
A REBOUND IN RETAIL SALES EXPECTED
NEW SUPPLY CONCENTRATED IN PRIME LOCATIONS
Alargeportionofnewurbanprojectsin2013willbeinprimelocations.Meanwhilethesuburbanmarketisexpectedtobecomeanemerginghot-spot.
finAnciAL indices
RENTAL INFORMATION
Urban Prime Shopping Centres Rental Value^ RMB 762 psm pm
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 12
^neteffective,onNLA
12-MONTH OUTLOOK
Rental ValueUrbanPrimeShoppingCentres
Capital ValueUrbanPrimeShoppingCentres
demAnd
sUPPLy
The evolution of Beijings retail landscape has closely followed the redevelopment of the Chinese capital both before and since the 2008 Olympics. Previously overshadowed by Shanghai in terms of retail cachet, Beijing is now pivotal to the China expansion strategies of international retailers. An entire spectrum of consumer brands is now delivering extravagant campaigns targeting discerning shoppers in both downtown and decentralised areas.Well-managed malls in large mixed-use developments, such as Seasons Place, Oriental Plaza, Wanda Plaza, Solana and China Central Place, offer appealing locations for both brands and shoppers. Hip shoppers are attracted to The Village at Sanlitun, a central Beijing precinct offering edgy consumer brand stores, eclectic dining and entertainment. Newer shopping centres, such as Indigo in Jiuxinqiao and Xinao Shopping Centre in the 2008 Olympic Park, attract a mixed clientele, including younger consumers an increasingly influential China demographic.
LEASING TRANSACTIONS
Forever 212,500sqm,BeijingAPMEsprit 1,300sqm,SolanaApple2,300sqm,BeijingAPM
ParkviewGreen,ahigh-endshoppingmallintheCBDwaslaunchedin4Q12,adding56,000sqm(GFA)tothemarket.
ZhuozhanShoppingCentre(GFA300,000sqm),adepartmentstore,openedintheWestChanganStreetsubmarket.
F&B,fashion,jewellery,andhouseholdretailerswerethelargestcontributorstonettake-upin4Q12.
Fashionretailerswerekeentointroducemoresub-brandstocreatemoresalesopportunities.
During4Q12,luxurybrandspreferredopeningwatchstorestoapparelstores.
INVESTMENT TRANSACTIONSNo major investment deals in 2H12.
Completionsinthousandsqm
retAiL stocK comPLetions
FutureSupply
2008 2009 2010 2011 2012 2013F
386772 767 236 520 335
160
140
120
100
804Q
08 4Q
09 4Q
10 4Q11 4Q12
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
NOTABLE DEALS IN 2H12
4Q 2012 Highlights11RetailCities|Beijing
10CorsoComoAlexanderMcQueenCarolinaHerreraDeBeersForever21HarryWinstonPeutereyVeraWang
New RetaileRs iN 2012
Shanghai
Note:ShanghaiRetailreferstoShanghaisOverallPrimeretailmarket.Source:JonesLangLaSalle
Asset PerformAnceSLOWER RETAIL SALES GROWTH LIMITS RENTAL INCREASE
Onalike-for-likebasis,rentsinprimeanddecentralisedmarketsincreasedby4.1%and5.5%y-o-y,respectively.
VACANCY RISES IN SELECT SHOPPING CENTRES
Vacancyratesincreasedmarginallyinsomeexistingshoppingcentresasseveralelectronicsstoresandlarge-formatrestaurantsclosed.
12 montH oUtLooK
Inaslowergrowthenvironment,varianceofstoreperformanceislikelytoincreaseduetolocationsandlevelofexperienceofoperators.
PERFORMANCE GAP AMONGST RETAILERS TO CONTINUE
Asconsumersremainsensitivetoprices,rentalgrowthislikelytobeslowthrough1H13.Somemildpick-upmaytakeplacein2H13ifpro-consumptionpoliciesareaggressivelyrolledouttogeneratehighersales.
SUBDUED RENTAL GROWTH EXPECTED IN 1H13
STRONGER PRE-COMMITMENT FOR NEW PRIME SUPPLY
Thegapinpre-commitmentperformancebetweenprimeanddecentralisediswidening,leadingtomorepotentialnewcompletionswithhighvacancy.
finAnciAL indices
demAnd
Chinas most exciting and diverse retail city boasts sophisticated shopping on both sides of the Huangpu River that bifurcates Shanghai. In downtown Puxi, international and local brands vie for prime storefronts along the Nanjing Road and Huaihai Road thoroughfares. Luxury brand flagships are also magnetised to premium locations in Xintiandi and the restored heritage mansions along the riverfront Bund. Chic Shanghai mall shopping is popular, especially for high-end fashion brands in the smart surrounds of Plaza 66, Rel and Hong Kong Plaza. Across the river, Pudongs Super Brand Mall and ifc Mall offer designer shopping and smart dining in the Lujiazui commercial district noted for its dramatic skyline. Shanghais vast urban sprawl also offers plentiful retail development opportunities in decentralised areas, both east and west of the Huangpu River, and in the many satellite towns that are now connected by the citys extensive subway network.
retAiL stocK comPLetions
Completionsinthousandsqm
2008 2009 2010 2011 2012 2013F
35200 278 55 71 385
FutureSupply
RENTAL INFORMATION
Overall Prime Shopping Centres Rental Value^ RMB 48.5 psm per day
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 14
^net,onNLA
12-MONTH OUTLOOK
Rental ValueOverallPrimeShoppingCentres
Capital ValueOverallPrimeShoppingCentres
sUPPLy
RelDepartmentStore(45,700sqm)andTakashimayaDepartmentStore(61,000sqm)werecompletedin4Q12.
Inthedecentralisedmarket,threecommunitymallsopened.
GrowingcompetitionfromonlineretailforShanghaisincreasinglyprice-sensitiveconsumers.
Forshoppingcentres,thegapbetweenthemarketwinnersandloserswidenedin4Q12.
InternationalbrandscontinuetoopeninShanghaibutareincreasinglysensitivetotheprofitpotentialofeachstore.
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
130
120
110
150
140
100
904Q
08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
10 Corso Como3,000sqm,WheelockSquareForever 21 7,000sqm,TheBundPlazaAbercrombie & Fitch800sqm,JingAnKerryCentre
Plaza 353 (40,000sqm)soldforRMB2.37billionChannel One (42,000sqm)soldforRMB1.46billion
NOTABLE DEALS IN 2H12
4Q 2012 Highlights12RetailCities|Shanghai
CaliforniaFitnessDaisoJapanIppudoKiehlsMaxValuMuji
New RetaileRs iN 2012
Guangzhou
Note:GuangzhouRetailreferstoGuangzhousOverallPrimeretailmarket.Source:JonesLangLaSalle
Asset PerformAnceINVESTMENT TRANSACTIONS LIMITED IN 4Q12
Thelimitedavailabilityofsaleablestockandfirmaskingpricesdemandedbyvendorsresultedinfewtransactionsbeingrecordedduringthequarter.
FEW LANDLORDS SOUGHT TO INCREASE RENTS
Overallrentsedgedupmarginallyin4Q12by0.5%q-o-q,closetothe0.4%q-o-qgrowthrecordedin3Q12.
CAPITAL VALUES GROW
Coupledwiththelowerinterestrateenvironment,marketyieldsremainedbroadlyunchangedfromthepreviousquarter,resultingincapitalvaluesgainingby0.5%q-o-qin4Q12.
12 montH oUtLooK
Anyupsideonrentswilllikelyberestrictedbytherecordvolumeofnewsupplyduetobecompletedin2013.Assuch,weexpectrentstogrowbyafurther6-7%in2013.
RECORD NEW SUPPLY LIKELY LIMITS RENTAL UPSIDE
ThelatesteconomicindicatorssuggestthatChinaseconomyhastroughedandislikelytogrowataslightlyfasterratein2013,whichshouldhelpunderpinretailsalesgrowthanddemandforretailingpremises.
IMPROVING ECONOMY SHOULD AID RETAIL SALES GROWTH
INVESTMENT YIELDS TO REMAIN BROADLY STABLE
Investmentvolumesareunlikelytodiffergreatlyfrom2012.Marketyieldsareexpectedtoremainbroadlystablekeepinganymovementincapitalvalueslargelyinlinewithrents.
finAnciAL indices
demAnd
sUPPLy
The capital of southern Chinas Guangdong province, Guangzhou continues to benefit from the massive urban development programme undertaken before the 2010 Asian Games. Greatly enhanced infrastructure citywide has been accompanied by the opening of a handful of prime retail centres. Global and local retailers are also attracted to Guangzhou by its strong consumer spending combined with a close proximity and easy travel access to Hong Kong that have helped raise brand awareness.The emerging riverside district known as Zhujiang New Town is an appealing location for retailers because of its collection of new luxury hotels, premium offices, dining and entertainment. The Mall of the World, is scheduled to open here in 2013. Elsewhere in a city famed historically for its street market culture, the top malls are located in the Tianhe CBD.
RENTAL INFORMATION
Overall Prime Shopping Centres Rental Value^ RMB 446 psm pm
Stage in Cycle Rents Slowing No. of Quarters Since Last Trough 14
^net,onGFA
12-MONTH OUTLOOK
Rental ValueOverallPrimeShoppingCentres
Capital ValueOverallPrimeShoppingCentres
2008 2009 2010 2011 2012 2013F
405 302 120 290 541
AoyuanPlaza(90,000sqm),locatedinPanyudistrict,wastheonlynewsupplytobecompletedin4Q12.
Aslowdowninretailsalesgrowthcurbedleasingactivity.
Inspiteofaslowingretailmarket,somewell-knownretailersshowedconfidenceinthegrowthofthemarket,committingtonewstores.
TheremainingvoidinthenewlycompletedAoyuanPlazapushedtheoverallmarketvacancyrateupto3.1%byend-4Q12.
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
No major investment deals in 2H12.Sony2,800sqm,TaiKooHuiZara 4,300sqm,RockSquareJusco 25,300sqm,RockSquare
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
100
90
80
70
130
120
110
604Q
08 4Q
09 4Q
10 4Q11 4Q12
NOTABLE DEALS IN 2H12
4Q 2012 Highlights13RetailCities|Guangzhou
BillsKennel&SchmengerLePaindeJoelRobuchonRebeccaMinkoffTheConranShopKitchen
New RetaileRs iN 2012
TokyoFew cities can compete with Tokyo for the colour, vibrancy and sheer sense of theatre of its shopping experience. One of the worlds most famous shopping cities, the Japanese capital offers an alluring mix of grand malls, large department stores, sumptuously designed brand flagships and boutiques.Tokyos vast size means its shopping landscape is sub-divided into distinctive districts.Ginza is a refined, upmarket area where brand stores are interspersed between art galleries, restaurants and cafes.Roppongi combines clusters of offices and deluxe hotels with a pulsing nightlife and Roppongi Hills, one of Tokyos most popular malls. Young consumers head to Shibuya and Shinjuku districts, famed for their large departments stores and bright neon street advertising. Omotesandos offbeat street fashions appeal to youthful hipsters and tourists, whileTokyo Bayslarge shopping malls offering varied dining and entertainment options magnetises families on weekends.
Note:TokyoRetailreferstotheGinzaandOmotesandoPrimeretailmarket.Nohistoricaland/orforecaststockdataavailableforTokyo.Source:JonesLangLaSalle
Asset PerformAncePRIME RETAIL RENTS RISE 0.5% Q-O-Q IN 4Q12
CAPITAL VALUES EDGE HIGHER
Atend-4Q12,rentsforprimeretailspaceinTokyoincreased0.5%q-o-q,reflectinganincreaseinrentsforspaceonsomehigherfloors.
Stronginvestordemandunderpinnedgrowthincapitalvaluesof0.5%q-o-qin4Q12.
12 montH oUtLooK
Inlinewithanimprovingeconomicoutlook,rentsshouldrisemoderatelyin2013.
MODEST GROWTH IN RENTS EXPECTED
Theretailsectormayreceiveanaddedboostfromarecentlypassedstimuluspackageintendedtospureconomicactivityandcreatejobs.
ECONOMIC STIMULUS LIKELY TO SUPPORT RETAIL SECTOR
finAnciAL indices
RENTAL INFORMATION
Ginza & Omotesando Prime Street Shops Rental Value^ JPY 63,243
per tsubo per month Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 1^gross,onNLA
12-MONTH OUTLOOK
Rental ValueGinza&OmotesandoPrimeStreetShops
Capital ValueGinza&OmotesandoPrimeStreetShops
demAnd
sUPPLy
RedevelopmentoftheformerHanaeMoriBuildingsiteintheOmotesandoareaisdueforcompletioninMarch2013.
TheGinza6-chome10DistrictRedevelopmentProject,a13-storeybuilding,isexpectedtobeginconstructionin2014.
In4Q12,salesforlarge-scaleretailstoresdeclinedforthesecondconsecutivequarter,down0.5%y-o-y.
Theconsumerconfidenceindexcontinuestobeweak,decliningforthefourthconsecutivemonthinDecember.
Consumersremainconcernedovertheeconomy,partlyduetoweakexports.
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
120
100
80
604Q
08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
Tokyu Plaza Harajuku Omotesando (11,368sqm)soldforJPY45billionG-Bldg. Omotesando (1,508sqm)soldforJPY5.85billionOmotesando Gates Building (1,300sqm)soldforJPY4.3billion
Uniqlo 9,990sqm,GinzaKomatsuBuildingEmporio Armani 463sqm,OakOmotesandoCoach 600sqm,OakOmotesando
NOTABLE DEALS IN 2H12
4Q 2012 Highlights14RetailCities|Tokyo
A.Lange&SohneCarvenCostaCoffeeCrate&BarrelJLindebergPhilipSteinSmoothieKingStellaMcCartneyTommyBahamaToryBurch
New RetaileRs iN 2012
SingaporeSingapore is an aspirational shopping destination for visitors from across Asia Pacific and worldwide, in addition to boasting strong domestic purchasing power. This appeal is recognised by the tourism board, which heavily promotes its world-class malls and annual Great Singapore Sale. Top of the shopping list for locals and tourists is Orchard Road, an iconic strip of designer boutiques and glitzy malls, such as Ion Orchard, Paragon and Wisma Atria. Beyond downtown, Singapores retail scene is diversifying. The redevelopment of Marina Bay into an office, shopping and entertainment district features The Shoppes at Marina Bay Sands, a smart mall offering luxury boutiques and emerging labels. Nearby, the Suntec City Mall adjacent to the Suntec City Convention Centre has received a major revamp. Retailers are also tapping into domestic demand in decentralised areas, such as Dhoby Ghaut, and new shopping centres in suburban locations.
Note:SingaporeRetailreferstoSingaporesPrime,SuburbanandMarinaretailmarkets.Source:JonesLangLaSalle
Asset PerformAnceRENTS REMAIN RELATIVELY STABLE
TheMarinasubmarketregisteredamarginaldeclineof0.1%q-o-q,whiletheOrchardandSuburbansubmarketswereunchanged.
AVERAGE CAPITAL VALUES HOLD FIRM
Transactionvolumesdeclinedin4Q12,atraditionallyslowinvestmentperiod,whileaveragecapitalvaluesremainedflatsupportedbystrongdomesticliquidityandalowinterestrateenvironment.
12 montH oUtLooK
Theriseinbusinesscosts,attributabletoSingaporesstrongcurrencyandtheimplementationofthedependencyratioceilingon1July2012forforeignworkersintheservicessector,couldcapfurtherrentincreases.
RISING BUSINESS COSTS COULD CAP RENTAL GROWTH
Thelowunemploymentrateandimprovingeconomyshouldsupportincreasingrentalsbymid-2013.
INCREASING RENTALS EXPECTED BY MID-2013
finAnciAL indices
RENTAL INFORMATION
Orchard Road Prime Shopping Centres Rental Value^ SGD 4,204 psm pa
Stage in Cycle Rents Stable No. of Quarters Since Last Trough 11
^neteffective,onNLA
12-MONTH OUTLOOK
Rental ValueOrchardRoadPrimeShoppingCentres
Capital ValueOrchardRoadPrimeShoppingCentres
demAnd
sUPPLy
Occupancyremainstight,withsustainedinterestfromfoodandbeverageandfashionapparelretailers. PlazaSingapurasExtension(11,797
sqm)and100AM(11,799sqm)roundedout2012ssupply.
Atover80%,thepre-commitmentlevelsofbothmallswerehealthy.
TheSuburbansubmarketcontinuedtogeneratehealthyinterestfromretailers,bothdomesticandinternational.
RetailsalesinDecember(excludingmotorvehicles)declinedby0.4%y-o-y.
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
23085 156 64 85 199
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
100
95
90
110
105
85
80 4Q 08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
Nex(617,214sqft)soldforSGD825millionMurray Terrace (50,000sqft)soldforSGD75millionThe Quayside retail units (33,000sqft)soldforSGD69million
H&M20,000sqft,IONOrchardCrate & Barrel 16,000sqft,IONOrchardMulberry 4,000sqft,MandarinGallery
NOTABLE DEALS IN 2H12
4Q 2012 Highlights15RetailCities|Singapore
AlexanderMcQueenCoffeeBeanandTeaLeafFoodRepublicH&MPaylessShoesourceStellaMcCartneyTWGTeaSalon&BoutiqueTwiningsTea
New RetaileRs iN 2012
BangkokThailands retail market is expected to grow by around 10 per cent this year, and its capital boasts both strong consumption and global appeal as a shopping destination. Brand-hungry shoppers from home and abroad make for Bangkoks stylish city centre malls, such as Siam Paragon, Emporium, CentralWorld, Terminal 21 and Erawan Bangkok. New developments are also catching the eye. Signature 2012 openings included Mega Bangna, a 400,000 sqm mall featuring Thailands first IKEA store, and Asiatique the Riverfront, which combines a mall and night bazaar beside the Chao Phraya River that runs through Bangkok. Commanding attention in 2013 will be Central Embassy, a mixed-use residential and hotel development in the heart of the capital that promises a retail mall with just the right mix of chic and swagger. The development pipeline is expected to continue, Siam Future is among the developers building community malls in suburban Bangkok.
Note:BangkokRetailreferstoBangkoksPrimeretailmarket.Source:JonesLangLaSalle
Asset PerformAnce
12 montH oUtLooK
finAnciAL indices
RENTAL INFORMATION
Overall Prime Shopping Centres Rental Value^ THB 21,159 psm pa
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 15
^net,onNLA
12-MONTH OUTLOOK
Rental ValueOverallPrimeShoppingCentres
Capital ValueOverallPrimeShoppingCentres
demAnd
sUPPLy
Nonewprimeprojectscompletedin4Q12andSilomComplexwastheonlyprojecttocompleterenovations.
CentralEmbassyandEmquatier(TheEmporiumII)arescheduledtocompletein2013&2014respectively.
In4Q12,strongleasingdemandinprimeretailcentreswassupportedbyinternationalbrands.
RisingpurchasingpowerhasledretailerstoexpandtheircustomerbasetoThailand.
Theaveragevacancyrateincreasedin4Q12to6.8%asseveralprimecentresunderwentrenovations.
RENTS MOVE HIGHER
Supportedbystrongleasingdemandandhigherachievedrentsinrenovatedprojects,theaveragegrossrentin4Q12wasupby1.3%q-o-q.
CAPITAL VALUES RISE 1.3% Q-O-Q
Supportedbyongoinggrowthinrents,capitalvaluesroseby1.3%q-o-q,reflectingthestronginvestmentinterestinretailproperty.
Rentsareexpectedtoriseandthestronginterestinowningretailassetsisforecasttoseecapitalvaluesalsorise.
RENTS AND CAPITAL VALUES EXPECTED TO GROW
TheoutlookforBangkoksretailmarketshouldremainpositivein2013,givengrowingdomesticconsumptionandstrongleasingactivity,especiallyamonginternationalbrands.
RETAIL MARKET OUTLOOK SHOULD REMAIN POSITIVE
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
Family Mart (713branches)soldforTHB3.12billionMerry King Rangsit Building (20,000sqm)soldforTHB2billion
H&M 3,300sqm,SiamParagonUniqlo 1,780sqm,SiamParagonLouis Vuitton 450sqm,SiamParagon
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
187190 43 298 681 154
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
100
95
90
110
105
85
80 4Q 08 4Q
09 4Q
10 4Q11 4Q12
NOTABLE DEALS IN 2H12
4Q 2012 Highlights16RetailCities|Bangkok
AlfredDunhillBrooksBrothersFurlaMichaelKorsNewLookVictoriasSecret
New RetaileRs iN 2012
JakartaIndonesia is home to Southeast Asias largest population and one of the fastest growing economies in the world. Consequently, the retail market in the capital Jakarta is considered to offer high potential, and the shopping options and patterns of consumer behaviour are continuing to diversify.Jakartas leading malls include Plaza Indonesia, Grand Indonesia, Plaza Senayan and Pacific Place, all of which target middle to upper class spending power with a mix of mass market and luxury brands. Adding an extra frisson of excitement will be the opening in 2013 of a three-floor department store by Paris-based Galeries Lafayette at Pacific Place. A wave of real estate development has delivered two major new mall developments, Kota Kasablanka and Ciputra World, which is part of a large mixed-use complex featuring a luxury hotel, residences and offices.
Note:JakartaRetailreferstoJakartasOverallPrimeretailmarket.Source:JonesLangLaSalle
Asset PerformAnce
12 montH oUtLooK
Asweanticipatedemandtogrowsteadily,thevacancyrateislikelytoremainstablearoundthecurrentlevel(i.e.4-5%)in2013.
VACANCY LIKELY TO REMAIN STABLE
Theretailmarketisexpectedtoreceive223,000sqmofnewsupplyfromthreeprojects(LotteShoppingAvenue,St.MoritzandPondokIndahStreetGallery)in2013;almost70%ofthesethreeprojectshasbeenpre-committed.
THREE PROJECTS TO COMPLETE IN 2013
RENTS & CAPITAL VALUES EXPECTED TO RISE
Rentsandcapitalvaluesareprojectedtopickupinlinewiththeincreaseinretailsales.
finAnciAL indices
demAnd
sUPPLy
STRONG DEMAND HAS LIMITED IMPACT ON RENTS
Healthydemandgrowthhasyettotriggersignificantrentalincreasesaslandlordsfocusonattractingtenantstofill-upvacantspace.Overall,neteffectiverentsgrewmarginallyby0.8%q-o-qin4Q12.
GROWTH IN CAPTAL VALUES COMPRESSES YIELDS
Capitalvaluesgrewfasterthanrentsat1.4%q-o-q.Thispushedyieldstocompressby10basispointsto11.0%byend-4Q12.
Therewerenoprojectcompletionsin4Q12.
KotaKasablanka,whichwascompletedin3Q12,wastheonlyadditiontoJakartasprimeretailmarketintheyear.
Healthyeconomicgrowthandrobustdomesticconsumptioncontinuedtosupportretailsalesin4Q12.
Netabsorptiontotalled22,000sqmin4Q12,slightlyabovetheaveragelevelinthepreviousthreequarters.
Strongdemandresultedinmallvacancydecliningfrom5.4%in3Q12to3.7%byend-4Q12.
RENTAL INFORMATION
Overall Prime Shopping Centres Rental Value^ IDR 4,895,968 psm pa
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 7^
^neteffective,onNLA
12-MONTH OUTLOOK
Rental ValueOverallPrimeShoppingCentres
Capital ValueOverallPrimeShoppingCentres
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
2531 120 0 62 223
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
98
96
94
92
90
106
104
102
110
108
100
4Q 08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
No major investment deals in 2H12. Central Department Store 10,000sqm,GrandIndonesiaLotte Department Store 80,000sqm,CiputraWorldJakarta
NOTABLE DEALS IN 2H12
4Q 2012 Highlights17RetailCities|Jakarta
ArmaniJeansArmaniJuniorBurgDunkinDonutsLaTagliatellaNandosRobertoCavalliStarbucksThomasPinkVanLaack
New RetaileRs iN 2012
DelhiAs Indias retail sector prepares to profit from relaxed rules governing foreign direct investment by multi-brand retailers, Delhi seems poised to be a leading beneficiary. Indias vibrant, capital city encompasses several retail submarket spread across its sprawling landscape. The favourite hangouts for local shoppers include DLF Emporio, Select City Walk , DLF Promenade and Ambience Mallin South Delhi, Ambience Mall in Gurgaon and Pacific Mall in West Delhi. Competition to attract affluent, brand-savvy capital shoppers is increasing between retailers, especially in prime areas and the difference between high-quality retail projects and the less successful malls is increasingly apparent. Rapidly growing outbound travel is helping to boost sales for luxury retailers at Indira Gandhi International Airport, the largest and busiest airport in South Asia.
Note:DelhiretailreferstoDelhisOverallretailmarket.Source:JonesLangLaSalle
Asset PerformAnceRENTS STABLE
Overall,rentsremainedstableinallsubmarketsduringthequarter.
REVENUE SHARING ARRANGEMENTS RISE
Retailersresistedrentincrementsandfavouredrevenuesharingarrangementsoverplainleaseagreements.
CAPITAL VALUES HOLD FIRM
Inlinewithstablerents,capitalvalueswerealsorelativelyunchangedineverysubmarketin4Q12andyieldsheldfirm.
12 montH oUtLooK
Retailersareexpectedtopursuedealsinunder-constructionprojectsthatoffergooddesign,brandingandprofessionalmanagement,asthesefeatureswilllikelytranslatetohealthyfootfallandpositivebusinesspotential.
STRONG DEMAND SHOULD CONTINUE FOR NEW PROJECTS
Asglobalretailersandstategovernmentsdecideonwherestoresshouldbelocated,itisexpectedthattheintroductionofFDIintomulti-brandretailislikelytotakea6-12monthperiodtorollout.
FDI INTO MULTI-BRAND RETAIL LIKELY IN 2H13
RENTS EXPECTED TO MOVE HIGHER
Sustainedretailerinterestislikelytocauserentstomoveupwards,whilelowervacancysupportsariseinselectsubmarkets.Supplyrationalisationmayeasethedownwardpressureonrents.
finAnciAL indices
demAnd
sUPPLy
MSXCentralMarket(285,000sqft)inGreaterNoidaandEuroPark(450,000sqft)inGhaziabadopenedin4Q12.
Limitedvacancyingoodperformingmallspushedretailerstopre-commitinupcomingprojects.
Absorptionincreasedassmallstoreformatretailerswereactivein4Q12,withnetabsorptionrecordedat630,000sqft.
NewcompletionsintheSuburbscontributednearly97%oftotalnetabsorption.Overall,vacancydroppedto24.1%in4Q12.
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
168180 229 310 99 153
RENTAL INFORMATION
Prime South Shopping Centres Rental Value^ INR 242 psf pm
Stage in Cycle Growth Slowing No. of Quarters Since Last Trough 8
RentalInformationisforthePrimeSouthonly^gross,onGFA
12-MONTH OUTLOOK
Rental ValuePrimeSouthShoppingCentres
Capital ValuePrimeSouthShoppingCentres
90
80
70
110
100
60
504Q
08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
No major investment deals in 2H12. Hamleys 36,000sqft,DLFPlaceSaketMarks & Spencer 18,500sqft,MomentsMall
NOTABLE DEALS IN 2H12
4Q 2012 Highlights18RetailCities|Delhi
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
KennethColePizzaExpressStarbucksSuperdry
New RetaileRs iN 2012
MumbaiIndias pulsing financial and commercial hub is also the nations capital of style. Brand awareness among consumers is growing fast, encouraging more global retailers and luxury and fashion brands to tap into Indias edgiest retail market. Mall shopping is a popular concept, and shopping centres such as Palladium at High Street Phoenix, Atria, Inorbit and Oberoi Mall offer a sophisticated mix of retail, dining and entertainment. Mumbai is a vast city and the quality of mall developments in recent years has varied considerably. Shopping centres in the suburbs tend to offer better infrastructure and operational management in addition to large residential catchment areas for retailers. A wave of real estate development in 2011 caused an imbalance in supply, and several underperforming malls have been retrofitted into stand-alone and high street style retail formats.
Note:MumbairetailreferstoMumbaisOverallretailmarket.Source:JonesLangLaSalle
Asset PerformAnce
12 montH oUtLooK
Vacancyratesareexpectedtodeclineintheprimesubmarketsasdevelopersprefersmallstandaloneandmixeddevelopmentretailformatsinsteadofdistinctlargermalls.
DEMAND FOR SMALLER FORMATS TO PUSH VACANCY LOWER
FDI SHOULD SUPPORT THE RETAIL MARKET
TheopeningofFDIintomulti-brandretailislikelytoboosttheretailmarketinthemediumtolongtermduetotheentryofinternationalproducts,practicesandtechnology.
RENTS & CAPITAL VALUES EXPECTED TO GROW
Rentsandcapitalvaluesarelikelytoincreasegraduallyinallsubmarkets,albeitbyvaryingdegrees.
finAnciAL indices
demAnd
sUPPLy
RENTS RISE IN THE PRIME SOUTH & SUBURBS
RentsincreasedinthePrimeSouthby0.8%q-o-qin4Q12andintheSuburbsby1.0%q-o-q.Similarto3Q12,agradualincreaseinoccupancyinselectqualitymallsintheSuburbsraisedaveragerents.
SLIGHT INCREASE IN CAPITAL VALUES
Capitalvaluesincreasedmarginallyacrossallsubmarkets.However,thehighestgrowthincapitalvalueswaswitnessedintheSuburbsbecauseofitsgrowingimportanceasaninvestmentdestination.
Therewasonecompletionin4Q12,KaulHeritageCityMall(250,000sqft)inVasai.
Netabsorptionincreasedin4Q12asdomesticretailersexpandedtotakeafirst-moveradvantagefollowingachangetoallowFDIintomulti-brandretailing.
Mumbairecordedtotalnetabsorptionof217,000sqftin4Q12comparedto64,400sqftin3Q12.
MajorleasingactivitywasconcentratedintheSuburbsbecauseofitsqualitymalls,infrastructureandvastresidentialarea.
RENTAL INFORMATION
Prime South Shopping Centres Rental Value^ INR 244 psf pm
Stage in Cycle Rents Rising No. of Quarters Since Last Trough 7
RentalInformationisforthePrimeSouthonly^gross,onGFA
12-MONTH OUTLOOK
Rental ValuePrimeSouthShoppingCentres
Capital ValuePrimeSouthShoppingCentres
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
130349 228 334 88 123
100
90
110
80
70
604Q
08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
No major investment deals in 2H12. Marks & Spencer 18,000sqft,AndheriWestSmoke House Deli 2,115sqft,BKCPizza Express 3,900sqft,Colaba
NOTABLE DEALS IN 2H12
4Q 2012 Highlights19RetailCities|Mumbai
RentalValueIndex
CapitalValueIndex
IndexBase4Q08=100
CultureKingsMarimekkoPocoAustraliaSamsungT.M.LewinTopshop/Topman
New RetaileRs iN 2012
SydneySydneysiders love to shop, and Australias largest city counts an eclectic shopping environment befitting its status as a high-profile international destination. Shoppers in Sydney can choose from a diverse portfolio of smart malls, department stores, designer brand flagships and homegrown fashions. A large working population and a regular flow of tourists in the downtown CBD creates a strong market for its distinctive shopping centres, such as the historic Strand Arcade and Queen Victoria Building, plus the recently refreshed Westfield Sydney. Retail outlets also extend along George Street, the citys main thoroughfare, and are bookended by the busy China Town markets and precinct in the south and The Rocks near to the Harbour Bridge in the north. The waterside Darling Harbour is a popular shopping area for visitors. Beyond the centre, the suburban districts of Bondi, Chatswood and Parramatta also offer also offer diverse shopping experiences.
Note:SydneyRetailreferstoSydneysOverallretailmarket.Source:JonesLangLaSalle
Asset PerformAnce
LEASING INCENTIVES RISE
Leasingincentiveshaveincreasedacrossallretailformatsthroughouttheyeartoattractandretaintenants.
RENTS DECLINE IN SOME SUB-SECTORS
ChallengingleasingconditionsresultedinadeclineinrentsintheRegional(0.3%q-o-q)andNeighbourhood(-0.8%qo-q)categories.AveragerentswerestableintheCBD,Sub-regionalandBulkyGoodscategoriesin4Q12.
INVESTMENT MARKET INCREASINGLY ACTIVE
TheretailinvestmentmarkethasbecomeincreasinglyactivewithfourmajorsalesrecordedinSydneyin4Q12.
12 montH oUtLooK
Theprojectscurrentlyinthepipelinesuggestsupplyshouldbelimitedin2013butdevelopmentconditionsareimproving.
SUPPLY PIPELINE SHOULD BE LIMITED
Weexpectleasingmarketconditionstoimprovein2013,butrentalgrowthislikelytoremainbelowthelongtermaveragetrendintheshortterm.
RENTAL GROWTH TO REMAIN BELOW TREND
MODEST YIELD COMPRESSION EXPECTED
Theinvestmentmarketislikelytoremainrobustandinstitutionaldemandforcoreassetsisexpecttoresultinsomemodestyieldcompressionthroughouttheyear.
finAnciAL indices
demAnd
retAiL stocK comPLetions
Completionsinthousandsqm
2008 2009 2010 2011 2012 2013F
136146 199 121 114 43
FutureSupply
sUPPLy
RENTAL INFORMATION
Regional Shopping Centres Rental Value^ AUD 1952 psm pa
Stage in Cycle Rents Stable No. of Quarters Since Last Peak 5
^net,onNLA
12-MONTH OUTLOOK
Rental ValueRegionalShoppingCentres
ExtensionswerestartedatMacquarieShoppingCentre(31,800sqm)andDFOHomebushin4Q12.
Completionsin2012totalled114,200sqm,withBulkyGoodsbeingthedominantformat(52%).
NSWretailturnovergrowthacceleratedin2012butremainsconsiderablybelowthelong-termtrend.
Theaveragevacancyratedecreasedfrom2.3%in1H12to1.7%in2H12.
Theleasingmarketremainschallengingandfeedbackindicatesenquirylevelsremainlow.
RentalValueIndex
IndexBase4Q08=100
120
110
100
904Q
08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
Top Ryde City (77,060sqm)soldforAUD341millionBateau Bay Square (29,162sqm)soldforAUD164millionCentro Toormina (21,337sqm)soldforAUD65.5million
Samsung 212sqm,450GeorgeStreetTopshop / Topman 1,800sqm,455GeorgeStreetWilliams-Sonoma 2,040sqm,466-472OxfordStreet
NOTABLE DEALS IN 2H12
4Q 2012 Highlights20RetailCities|Sydney
GapMarimekkoSamsung
New RetaileRs iN 2012
MelbourneMelbourne is famed for its eclectic dining and colourful calendar of festivities, and its claim to be the heartland of Australian style and fashion is supported by growing global interest in the annual Melbourne Fashion Festival. Melbourne boasts a vibrant and diverse retail market, ranging from the artisans of Flinders Lane, the high-end stores on Chapel Street and Collins Street to the Bourke Street Mall and Chadstone the Fashion Capital.To position Melbourne as an internationally recognised shopping destination, the City of Melbourne teamed up with the Victorian State Government to develop the six-year Melbourne Retail Strategy. The initiative aimed to encourage the citys retail sector to constantly innovate and create campaigns that showcase Melbournes cultural, artistic and commercial diversity.
Note:MelbourneRetailreferstoMelbournesOverallretailmarket.Source:JonesLangLaSalle
Asset PerformAnceRENTS STABILISING
AveragespecialtystorerentswereunchangedinMelbournein4Q12acrossallretailformats.Thebroad-basedslowdownisinlinewithnationaltrendsinretailrents.
SEVEN MAJOR SALES TRANSACT IN 4Q12
RetailtransactionstotalledAUD292.1millionin4Q12andlargelycomprisedofWestfieldsacquisitionofa20%shareinWestfieldKnoxand50%shareinCaseyCentral.
YIELDS REMAIN STABLE
PrimeequivalentyieldswerestableacrossallretailformatsexceptRegionalcentres.ThemedianRegionalcentreyieldforMelbournetightenedfrom6.50%in3Q12to6.25%in4Q12.
12 montH oUtLooK
Theforwardpipelineofprojectscurrentlyunderconstructionorwithplansapprovedsuggestsannualsupplyshouldaverage229,800sqmoverthenextthreeyears.
NEW SUPPLY SIMILAR TO 2012
TheVictorianeconomyandretailturnoverareforecasttopostamodestrecoveryin2013.Leasingmarketconditionsarethereforesettoimproveandlowvacancyratessuggestsomemildupwardpressureonrents.
MILD RENTAL GROWTH ANTICIPATED
YIELDS EXPECTED TO BE RELATIVELY STABLE
Averageretailyieldsareforecasttoremainstabledespiterobustinvestordemandbuttheremaybefurtherwideningoftheyieldrangeinsomeretailsub-sectors.
finAnciAL indices
demAnd
Melbournesaveragevacancyratewasstablein2H12at2.1%buttheresultsweremixedbetweenretailformats.
retAiL stocK comPLetions
Completionsinthousandsqm
FutureSupply
2008 2009 2010 2011 2012 2013F
250359 61 190 222 275
sUPPLy
Supplyroseto221,550sqmin2012,representinga17%increasefrom2011.
Fournewprojectscompletedin4Q12comprisingthreeBulkyGoodsoutletsandoneNeighbourhoodcentre.
Retailturnovergrowthdeclined0.3%y-o-yinDecember,reflectingaslowerstateeconomyandlabourmarket.
RENTAL INFORMATION
Regional Shopping Centres Rental Value^ AUD 1479 psm pa
Stage in Cycle Rents Stable No. of Quarters Since Last Peak 0
^net,onNLA
12-MONTH OUTLOOK
Rental ValueRegionalShoppingCentres
RentalValueIndex
IndexBase4Q08=100
120
110
100
904Q
08 4Q
09 4Q
10 4Q11 4Q12
LEASING TRANSACTIONS INVESTMENT TRANSACTIONS
Centro Keilor (19,052sqm)soldforAUD67millionAxis South Morang (20,000sqm)soldforAUD30millionLaurimar Shopping Centre (4,491sqm)soldforAUD19million
Topshop / Topman 1,600sqm,HighpointShoppingCentreSamsung 380sqm,HighpointShoppingCentreZara 2,400sqm,HighpointShoppingCentre
NOTABLE DEALS IN 2H12
4Q 2012 Highlights21RetailCities|Melbourne
PROPERTY AND ASSET MANAGEMENT
AmanoraTownCentre,Pune1.1millionsqft
CentreSquare,Cochin450,000sqft
CentreSquareBaroda,Vadodara140,000sqft
GulmoharPark,Ahmedabad220,000sqft
Jones Lang LaSalle Retail Track Record: Recent Highlights
LEASING
Marks&Spencer,Mumbai18,000sqft
RelianceHyper,Nashik75,000sqft
PizzaExpress,Mumbai3,900sqftfirsttransaction
asexclusiveadvisor
Marks&Spencer,NewDelhi18,500sqft
Hamleys,NewDelhiFirstHamleysstoreinNorthern
India36,000sqft
Starbucks,NewDelhi5,000sqft,firststorein
NorthIndia
Thailand
IndiaChina
LEASING
Aeon,Guangzhou135,625sqft
ZARA,Guangzhou33,368sqft
I.T,Shanghai25,295sqft
Inditex(ZARA,MassimoDutti,BershkaandPull&Bear),Jilin3,484sqft
BeijingHuananCenter,Beijing807,300sqft
PROJECT LEASING
RockSquare,Guangzhou1,076,391sqft
TheFubonInternational,Shanghai1,022,571sqft
TheStarlifePlaza,Shanghai1,184,030sqft
TheEcoIslandProject,Nanjing376,737sqft
TheTiandiHui,Wuhan1,076,391sqft
PROJECT LEASING
AutomallRangsit,PathumThani473,612sqft
PROPERTY AND ASSET MANAGEMENT
144,571,103millionsqft
LEASING
15.07millionsqft
PROJECT LEASING
58.21millionsqft
CAPITAL MARKETS
billionintransactions3.22> USD
Wine Connection, Phuket
LEASING
WineConnection,Phuket4,521sqft,BananaWalk
VillaMarket,Phuket4,854sqft,BananaWalk
CAPITAL MARKETS
EverbrightMall,GuangzhousoldforUSD318million
TianxingRooseveltMall,DaliansoldforUSD330million
PROPERTY AND ASSET MANAGEMENT
MacquarieGroup5.3millionsqftacross9
shoppingcentres
TheStarlifePlaza,Shanghai1,184,030sqft
RockSquare,Guangzhou1,076,391sqft
PROPERTY AND ASSET MANAGEMENT
BananaWalk,Phuket129,167sqft
The Fubon International, Shanghai
CAPITAL MARKETS
NEX617,214sqftsoldforUSD662million
MurrayTerrace50,000sqftsoldfor
USD60million
TheQuaysideretailunits33,000sqftsoldfor
USD55million
HougangPlaza79,640sqftsoldfor
USD96million
SingaporeLEASING
PureYoga11,507sqftandanchortenantforChevron
House
TommyBahamanewtomarketbrand1,959sqft
CAPITAL MARKETS
WestlandsCentreG/Fshop1soldforUSD33million
YenLokBuildingvariousportionssoldforatotalof
USD13million
Hong KongLEASING
Longchamp8,000sqft,Silvercord
GAP15,800sqft,MPM
Breitling10,000sqft,517-519HennessyRoad
Hamleys, New Delhi
NEX, SingaporeLongchamp, Hong Kong
Measurementsarerepresentedinsquarefeet,roundeduptothenearestfigure.QuotedvalueshavebeenconvertedtoUSDroundeduptothenearestfigureandcorrectasof25March2013.
KoreaPROJECT LEASING
SignatureTower,Seoul39,975sqft
T-Avenue,Seoul10,778sqft
New ZealandLEASING
ANZWellington,22-26WillisStreet5,640sqft
MetroCentre,291-297QueenStreet,Auckland26,910sqft
CAPITAL MARKETS
KelstonShoppingCentre,AucklandUSD24million,232,156sqft
PoriruaMegaCentre,Wellington436,099sqftsoldforUSD25million
PROPERTY AND ASSET MANAGEMENT
Eastgate,Christchurch290,626sqft
MerivaleMall,Christchurch80,729sqft
RetailTrackRecords 23
LEASING
Telstra,Brisbane1,340sqft
MosBurger,BrisbanefirstCBDstore1,722sqft
GuzmanyGomezlargeststoreinAustralia3,767sqft
Australia
CAPITAL MARKETS
FederationCentresPortfolio(formerlyCentro)50%stakesoldinthreeregionalshoppingcentresacrossAustraliaforUSD722million(GalleriaWA,TheGlenVicandColonnadesSA)
MyerCentre,Brisbane(50%)683,293sqftsoldforUSD383million
TopRydeCity,Sydney829,467sqftsoldforUSD356million
PROPERTY AND ASSET MANAGEMENT
BatemansBayShoppingCentre,NSW226,042sqft
KensingtonVillageShoppingCentre,VIC64,583sqft
HorshamPlazaShoppingCentre,VIC135,625sqft
ShoppingCentresofAustraliaTrust(SCA)managementof50shoppingcentresacrossAustraliatotallingover3,767,369sqft
Top Ryde City, Sydney
T-Avenue, Seoul
Kelston Shopping Centre, Auckland
It takes perspective and expertise to stay ahead. Jones Lang LaSalle combines in-depth local knowledge with far-reaching global insights to help you discover hidden opportunities.
With our retail intelligence and integrated platform of leasing, management and capital markets, we provide solid advice that will maximise your investment.
From the high street to out of town, from mini-mart to mega-mall, we measure value the same way one square at a time.
Retail opportunities in every square
joneslanglasalle.com/asiapacific
Asia PacificAnuj PuriHeadofRetail,AsiaPacificChairmanandCountryHead,[email protected]
David [email protected]
AustraliaTony DohertyHeadofRetail,[email protected]
Cameron [email protected]
ChinaEugene [email protected]
Colin [email protected]
Hong KongTom [email protected]
IndiaPankaj [email protected]
Shubhranshu [email protected]
IndonesiaAngela Wibawa [email protected]
James [email protected]
JapanMidori SuzukiCo-HeadofPropertyandAssetManagementmidori.suzuki@ap.jll.com
Taichi IioHeadofRetail,[email protected]
KoreaJay [email protected]
MacauGregory [email protected]
New ZealandAlistair [email protected]
Chris [email protected]
Philippines Lizanne [email protected]
SingaporeHannah [email protected]
TaiwanSteve [email protected]
ThailandSuphin [email protected]
Krid [email protected]
VietnamTrang [email protected]
Asia Pacificwww.joneslanglasalle.com/asiapacificAustraliawww.joneslanglasalle.com.auChinawww.joneslanglasalle.com.cnHong Kongwww.joneslanglasalle.com.hkIndiawww.joneslanglasalle.co.inIndonesiawww.joneslanglasalle.co.idJapanwww.joneslanglasalle.co.jpKoreawww.joneslanglasallekorea.co.krMacauwww.joneslanglasalle.com.moNew Zealandwww.joneslanglasalle.co.nzPhilippineswww.joneslanglasalle.com.phSingaporewww.joneslanglasalle.com.sgSri Lankawww.joneslanglasalle.com.lkTaiwanwww.joneslanglasalle.com.twThailandwww.joneslanglasalle.co.thVietnamwww.joneslanglasalle.com.vn
Jones Lang LaSalle Asia Pacific
COPYRIGHT@JONESLANGLASALLE2013.Allrightsreserved.Thecontentofthispublicationhasbeencompiledfromthevarioussourcesacknowledged.Theinformationisfromsourceswedeemreliable;however,norepresentationorwarrantyismadetotheaccuracythereof.Thisreporthasbeenproducedsolelyasageneralguideanddoesnotconstituteadvice.Westressthatforecastingisaproblematicalexercisewhichatbestshouldberegardedasanindicativeassessmentofpossibilitiesratherthanabsolutecertainties.