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Asia Pacific Real Estate Market Outlook 2020

Hear from our experts



Retail sales growth was muted in 2019 as consumers turned more prudent amid growing economic uncertainty. 2020 is expected to see slightly stronger performance on the back of more stable regional economic prospects. However, consumers in developed Asia Pacific markets – particularly Hong Kong SAR, which sociopolitical unrest persists – will remain cautious. In contrast, emerging markets and lower tier cities are expected to perform well on the back of rapid urbanisation and rising household incomes.

Demand for brick-and-mortar retail space is forecast to remain stable despite online sales growth continuing to outpace that in physical stores. More Asia Pacific brands will seek to expand regionally, while emerging online retailers will continue to open physical stores to generate new sales channels.

Retailers will nevertheless continue to adopt a prudent approach, a trend that will result in limited net growth in store numbers. More capex will be allocated to new openings in up-and-coming markets in China, India and Southeast Asia. Gateway cities will continue to see a steady flow of new entrants, while existing brands will focus on flight-to-quality relocations/renewals.

Demand from F&B is set to remain stable but the sector is already oversaturated. Competition between retailers will intensify and the lifespan of brands will shorten. Other stable sources of demand will include sporting goods and personal care retailers.

Luxury retailers are expected to turn more slightly active in 2020, supported by robust spending by Mainland Chinese consumers, which contributed an estimated 90% of luxury sales growth in 20192. Tokyo, Sydney and leading tier II Chinese cities will benefit but Hong Kong SAR will see further closures.

Demand from the fashion industry is set to remain dominated by top-tier fast fashion retailers. However, recent closures and market withdrawals by several underperforming U.S. labels may herald a shift to stronger online platforms and fewer physical stores.

Retailtainment is set to remain a solid source of leasing demand, with indoor playgrounds, edutainment centres and hobby workshops expected to be particularly active. These tenants’ relatively lower rental affordability and large size requirements of up to 60,000 sq. ft. will likely prompt them to seek new space in secondary locations3.



2 2019 Worldwide Luxury Market Monitor, Bain & Company – Altagamma.
3 Retailtainment 2.0: Invest in Experience, CBRE Research, 2019.


New retail supply in Asia Pacific will reach 43 million sq. ft. in 2020, an increase of 10.5% y-o-y. Much of this spike is due to supply slippage in China Tier I cities, where around 5 million sq. ft. of new space due for completion in 2019 was delayed to this year.

Around 70% of new stock will be in China tier I cities. Most Asian markets will see a smaller pipeline in 2020. In the Pacific, new CBD supply will largely be confined to retail podiums in office buildings.

Ageing and/or underperforming retail stock will continue to be closed for renovation or redevelopment. Shopping mall operators will retain their existing strategy of increasing the proportion of space allocated to experience-based retailers such as F&B and entertainment while adding innovative new design features. Recent years have seen the addition of coworking centres to shopping malls but this trend has now cooled as the sector consolidates.

Prime space in core locations will remain keenly sought after but secondary areas will struggle amid declining footfall.



Retail rental growth in 2019 was weaker than original forecasts, with more than half of markets recording a decline. 2020 is expected to bring stabilisation as most markets gradually recover. Hong Kong SAR was the worst performer in 2019 and is set to remain so in 2020, with high street rents expected to undergo a further 15% fall. Most of this decline will be frontloaded in H1 2020.

Mild rental growth is anticipated in Beijing and Sydney. Beijing has seen an upswing in leasing interest following the government’s introduction of cash incentives to retailers opening their first store in China and/or the city. In Sydney, more retailers are seeking cost-effective options in prime CBD locations due to high rents in super prime areas.

In Tokyo (Ginza), while luxury retailers continue to seek standalone stores, their cautious stance on rents and other leasing terms in light of weaker consumer spending and a potential slowdown in inbound demand may create some rental weakness this year.

The performance of prime, secondary and non-discretionary retail locations will continue to diverge in 2020. Prime locations are set to benefit from solid demand from luxury goods retailers as well as other categories eyeing upgrading opportunities. However, retailers’ risk-averse attitude towards current high rents will limit prospects for rental growth. Neighbourhood malls in densely populated areas and cities will continue to benefit from resilient footfall and spending, but mid-tier secondary malls may struggle.





The structural shift to online retail will continue in 2020, albeit at a slower pace. Rapid growth in Southeast Asia and India will require retailers to invest in online sales channels and fulfilment capabilities while restructuring their brick-and-mortar store networks.

Despite the online sales boom, physical retail continues to perform well. Building a unified omnichannel platform capable of complementing brick-and-mortar stores will remain a key priority for retailers in 2020. The growth of omnichannel will also spur additional demand from online retailers opening physical stores.


CBRE anticipates stronger leasing demand from entertainment and experience retailers in 2020, supported by shopping centre landlords’ willingness to lease space to these categories to attract new consumers and transform their properties into activity centres for their targeted demographic.

In China, the substantial development pipeline is prompting landlords to explore new concepts. Several major projects in satellite towns of tier I cities now host large operators such as theme parks and serve as one-stop shopping and entertainment destinations. Examples include Sunac Snow Park in Guangzhou and National Geographic Ultimate Explorer in Hengqin.

Other key trends will include continued growth in demand for pop-up stores, with some retailers experimenting with new formats and locations to differentiate themselves from the competition.


Recent years have seen retail landlords and occupiers focus on upgrading the shopping experience by adding more interactive and “instagrammable” features to their space. CBRE expects this trend to continue in 2020, with art and culture-related content taking on a more prominent role in the creation of retail spaces.

Phygital – bringing together the best of physical and digital retail to provide a fluid customer experience – will be another key trend. Retail operators will need to invest heavily in analytics tools to better understand consumer behaviour and provide a more customised retail offering. Mobile apps enabling convenient self-service are set to be another area of focus.

Although more retailers and shopping centre landlords have successfully completed repositioning exercises in recent years, investment in such initiatives has been significant and has weighed on profitability. CBRE expects to see the introduction of more unique products, members-only offers and events in 2020 as retail operators look to boost sales.


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Manish Kashyap
Global President, Advisory & Transaction Services
Advisory & Transaction Services
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Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
+852 2820 8160
+852 2810 0830
Cynthia Chan
Asia Pacific
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+852 2810 0830
Liz Hung
Asia Pacific
+852 2820 6557
+852 2810 0830