Prime Retail Rents Accelerate in Asia Pacific in Q2 as Retail Sales Remain Solid across Key Markets

Prime retail rental growth in Asia Pacific accelerated in the second quarter with the CB Richard Ellis Asia Pacific prime retail rental index rising by 5.3% y-o-y. The figure was an improvement on the 4.1% y-o-y growth recorded in the first quarter and rental growth is now back to where it was prior to the onset of the global financial crisis in mid-2008. Greater China recorded robust growth of 12.3% y-o-y whilst the Pacific re-emerged as a driver of growth during the period, rents rising by 6.8% y-o-y. Retail sales growth remained solid across most key markets during the second quarter, rising by 8.2% y-o-y in May (excluding Japan). Manufacturing activity slowed considerably, however, partly due to disruption in the regional supply chain caused by the Japan quake and tsunami. Whilst economic fundamentals in Asia Pacific remained positive, concern was growing over the broader global picture as the United States narrowly avoided default and the situation in the Eurozone worsened. The second quarter nevertheless saw further expansion by domestic and international retailers with fast fashion stores continuing to account for the majority of prime leasing deals. This group of retailers was particularly active in Greater China and appeared to be gradually replacing luxury brands as the main driver of demand. Watch and jewellery retailers, department stores and F&B outlets were also in expansion mode. Worries remain over the scale of new supply in the pipeline with 35 million sq. ft. (325,300 sq.m.) of new retail space scheduled to be completed in 2011, around 80% of which is set to come on stream in the second half of the year. The development pipeline in the Pacific remains limited, however. Mr. Sebastian Skiff, Executive Director, CBRE Retail – Asia said, “Beijing, Guangzhou, Hanoi and Ho Chi Minh City will see a particularly large volume of new completions to meet the needs of international retailers looking to expand. Elsewhere in Greater China, new retail supply will remain tight in Hong Kong and Taipei.“ “Looking ahead, rents are expected to continue to rise in Asia although the rate of growth will begin to moderate as new supply is completed in a number of key markets and consumers turn more cautious amid the deteriorating global economic outlook“, he continued. For further information: Ms. Ngamjai Jearrajarat Manager Marketing and Communications - Thailand CB Richard Ellis 66 2 654 1111 ext 522 [email protected] Click for photo release at www.thaipr.net

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