Despite slowing sales figures to date in 2012, growing urbanisation and the rise of the middle class means Asia remains a desirable for retail expansion and investment, according to Cushman & Wakefield.
Cushman & Wakefield’s MarketBeat Retail Snapshot Asia Pacific for Q2 2012, says over the first six months of the year China’s retail sales were 2.4 percent lower than the previous corresponding period.
In Hong Kong, the city experienced its slowest rate of sales growth since 2009. Slowing inbound tourism and weakening consumer sentiment saw declines in spending, according to the report.
Sales in South Korea’s major discount chains also declined and in Singapore retail sales grew by 1.4 percent, compared to 3.6 percent in the previous corresponding period.
Meanwhile, the report says Australia and Japan saw an increase in spending volumes. Australia’s annual growth in retail spending was 4 percent in June, which is its highest level since 2009 according to the report.
Spending in Japan was also up 3.1 percent on the previous corresponding period.
The report says a potential slowing of the APAC economies are linked to Europe’s potential technical recession, impeding confidence in the region.
It says despite this, APAC continues to be a highly sought-after expansion point for offshore retailers. “With steady economic growth and increasing levels of consumption, the Chinese consumer remains an integral part of most retailers’ globalisation strategies,” the report says.
H&M reported its sales in China increased by 47 percent in the first half of 2012, and Apple is looking to expand its store network in China to include Chengdu and Shenzen, the report adds.
It says rental rates remained largely unchanged over the first six month of 2012, while urbanisation rates drove retail investment throughout Asia. In 2011, ‘second-tier’ Chengdu had the highest rate of construction starts.
Looking ahead, the report says emerging markets and second-tier cities have a ‘growing horde of middle-class consumers’, and despite near-term challenges, the region will remain attractive to global retailers and investors.
View the Cushman & Wakefield report