The retail sector has proved the most resilient in terms of performance across Asia in 2003, and as a consequence no rental decline is forecast in any Asian cities.In Malaysia, Indonesia and Thailand, where more than 50 percent of the population lives outside urbanized areas, new retail formats such as discount retailing or hypermarkets have been increasingly developed and have attracted investment interest.Australia has recently passed the peak of a fairly strong growth cycle in retail spending driven by low interest rates, higher wealth (off the back of rapidly rising house prices), and low unemployment. While the outlook for the economy remains positive over the next three years, some moderation of retail spending is likely, particularly amongst the household goods and discretionary spending categories.
Australia has a fairly mature shopping center sector which has been steadily increasing over the past 20 years. Consequently, a wide variation in the performance of individual centers at a local level is evident.Rents remain high in Tokyo, Hong Kong and Singapore where there is a finite amount of retail space available. Mumbai and New Delhi offer value for money as rates are still comparatively low and there is a large, increasingly affluent resident consumer population.Knight Frank’s top ten strongest retail markets for 2004 in Asia Pacific include: Kuala Lumpur, Brisbane, Melbourne, Hong Kong, Mumbai, Singapore, Delhi, Bangkok, Shanghai and Sydney.
Kuala Lumpur and Brisbane offer excellent opportunities as retail locations in 2004 even though rental growth is projected to be lower than in other cities. The top performers with respect to rental growth in 2004 are Hong Kong (10 percent), Mumbai (10 percent), Kuala Lumpur (8 percent) and Delhi (7 percent). Brisbane, Perth, Tokyo and Singapore are expected to see growth of 5 percent.Rental growth of 4 percent is expected in some of Australia’s most established retail markets such as Melbourne, Adelaide and Sydney.No rental growth has been identified in Bangkok. Although the overall economy is improving (led by domestic demand), there will be a sizeable influx of new prime space into the market next year. This will dampen rental growth prospects.