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Asia Pacific Market Outlook Soundbites


Liz Hung, Associate Director, Research, APAC

Ping Lee, Head of Research, Taiwan

Marcos Chan, Head of Research, Hong Kong




Asia Pacific registered a steady uptick in retail trading activity in H2 2020 following the relaxation of lockdowns and other mobility restrictions. Mainland China is leading the rebound in discretionary consumption, with cosmetics and jewellery sales achieving y-o-y growth of 32.3% and 24.8%, respectively, in November 2020.

The modest regional recovery is expected to continue in H1 2021. However, a recent resurgence in COVID-19 infections and subsequent tightening of social distancing measures will inevitably exert a negative impact on brick-and-mortar retail. Additional headwinds include the expiry of government stimulus packages, which will have a detrimental effect on the labour market. Most respondents to CBRE Asia Pacific’s October 2020 Retail Occupier Flash Survey stated that business activity is unlikely to fully recover to pre-pandemic levels until H2 2021.

Several Asia Pacific markets have relaxed restrictions on cross-border travel for business or family reasons but tight controls on leisure travel continue to weigh on the near-term outlook for the retail market in inbound tourist-driven destinations such Hong Kong SAR, Bangkok and Seoul. Nonetheless, markets with strong domestic tourism, such as Mainland China and Australia, will perform comparatively better.

The pandemic-led surge in e-commerce sales witnessed in H1 2020 has begun to stabilise. 2021 will see milder y-o-y growth in online retail consumption due to a high base effect.


With the shift to e-commerce fundamentally changing shopping behaviour, retailers will focus on refining their online offering. Landlords should also invest in proptech to enhance consumer experience.

Figure 14




Retail leasing demand is expected to pick up over the course of 2021, with half of respondents to CBRE Asia Pacific’s October 2020 Retail Occupier Flash Survey stating that they intend to proceed with new store openings this year. Gateway cities will remain the primary focus for international retailers, with many groups focusing on Asia Pacific for business growth due to the region’s relative success in containing the pandemic. Mainland China, where brick-and-mortar retail operations are largely back to normal, will see the strongest interest. While European and U.S. retailers retain a strong appetite for expansion, travel restrictions continue to hinder site visits and leasing decisions.

CBRE expects demand to be driven by domestic brands, supported by growing interest in local and regional products and designs among younger shoppers. Many such retailers will be looking to capitalise on the current downturn to conduct flight-to-quality relocations. Nevertheless, retailers will continue to adopt a prudent approach towards expansion as the economic recovery remains at a very early stage. With closures of underperforming locations set to continue, net growth in the number of stores will be limited.

Improved space availability and lower rents will drive online retailers to establish brick-and-mortar stores as they look to enhance their brand and establish new sales channels. In the F&B segment, operators will further augment their online capacity by opening takeaway outlets and utilising dark kitchens to serve on-demand delivery apps.


While portfolio rationalisation and lease restructuring are set to continue, rising space availability will provide retailers with opportunities to reduce rental expenses while enhancing the quality of their store network. CapEx for new leases and store fit-outs will remain tight in the absence of solid and sustainable signs of recovery.

Figure 15




After falling by 11.3% y-o-y in 2020, Asia Pacific retail rents are expected to stabilise over the course of 2021. Rental growth will be led by Mainland China, while most other markets will experience a mild correction. Laggards will include Hong Kong SAR, which is forecasted to experience an additional 5 to 10% y-o-y decline in high street rents this year, bringing rents to levels last witnessed in 2003. While rents are not expected to stabilise until 2022, those for shopping centres are expected to be more resilient.

Demand for prime CBD retail space will recover as employees gradually return to the office and lower rents attract upgrading demand. While neighbourhood retail will continue to perform well as consumers opt to shop locally, malls lacking strong residential catchments will struggle. The shift to omnichannel retail may encourage some landlords to convert underperforming assets to last mile delivery hubs to service e-commerce delivery.

With landlords forced to retain a flexible stance towards rents and terms, retailers will command strong bargaining power. CBRE expects shopping mall performance metrics to broaden beyond in-store sales to include omnichannel sales and other criteria such as foot traffic generation, in-mall engagement and social media performance. Other key trends will include retailers demanding more detailed Force Majeure clauses and/or early break options in lease agreements.


Rather than competing on rents, landlords should invest in enhancing their building hardware and services. Closer partnerships and collaboration with tenants, particularly in the areas of marketing and promotion, will be essential.

Figure 16

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Asia Pacific Real Estate Market Outlook 2021

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Manish Kashyap
Global President, Advisory & Transaction Services
Advisory & Transaction Services
+65 6326 1220
+65 6225 1987
Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
+852 2820 8160
+852 2810 0830
Ada Choi
Ada Choi, CFA
Head of Occupier Research, APAC
& Head of Data Intelligence and Management, APAC
+852 2820 2871
+852 2810 0830
Liz Hung
Asia Pacific
+852 2820 6557
+852 2810 0830