Hong Kong, Singapore and Beijing are expected to become the world’s most important cities for luxury retail over the next five years, driven by demand for international brands from Asia’s emerging middle class.
Hong Kong was named the Asia Pacific region’s gateway for international retailers despite commanding the highest rents in the region.
With an expanding and urbanising population and high economic growth, the region is expected to lead the way in retail, according to a report from JLL.
By 2020, Asia Pacific will account for 46 per cent of the world’s middle class, up from about a third now, and 40 per cent of the world’s economy, up from 36 per cent now.
Shanghai, Singapore, Beijing and Tokyo round out the region’s top-five cities with the highest concentration of luxury and mid-tier brands, the report said.
Most of these brands come from the United States, such as Tommy Hilfiger and Coach in the luxury segment and Victoria’s Secret and American Eagle in the mid-tier level.
Companies from Italy and the UK followed.
Home-grown fashion brands are also gaining market share in the region. They are led by Japan’s Uniqlo, which expects to open 400 stores globally in the next few years, Singapore’s Charles & Keith, Australia’s Cotton On and Oroton, Japan’s Muji and FamilyMart, and South Korea’s Samsung and The Face Shop.
In Hong Kong, where space is in short supply, shopping centre rents were almost the double of the next most expensive city, Tokyo. Annual rents in Hong Kong were US$14,634 per square metre, compared with $7,149 per square metre in Tokyo.
Sydney, Seoul and Melbourne followed, ranging between $5,700 and $7,100 per sq metre. Retail rents were the lowest in India and South East Asia, where space can cost a one-tenth that of Hong Kong.
In Dubai, according to a recent JLL study, rents in prime shopping malls were less than half compared with the top tier Asia Pacific cities. In the second quarter, at the prime shopping malls, annual rents were $2,100 per sq metre, a rise of 54 per cent over the same period last year, and at secondary locations, rents were $640 per sq metre, a rise of 36.8 per cent.
Despite the rise in rental prices, vacancy rates at Dubai’s shopping areas fell to 8 per cent in the second quarter from 13 per cent during last year.
The UAE’s retail sector is expected to grow by 32.9 per cent next year to Dh151 billion from Dh114bn in 2012, according to a Dubai report on foreign investment in June.
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