APAC retail rents to rise gradually as travel rebounds: report

Landlord strength is evident in markets such as Taipei, Bangkok, Singapore, and Vietnam.

Retail rents across the Asia Pacific region are set to gradually rise as travel rebounds and market conditions improve, except for top-tier Chinese cities, as per Savills’ Asia Pacific Retail report.

According to the report, landlord strength in cities like Taipei, Bangkok, Singapore, and Vietnam is evident.

Meanwhile, major markets like Seoul, Kuala Lumpur, and leading Chinese cities favor tenants, offering negotiation opportunities for expansion.

“We believe the worst is behind us, and there is a relatively positive near-term outlook across the region,” the report noted. 

“The sustained recovery of international travel and the general downward trend of inflation will continue to lift spending and subsequently the retail market. Eleven out of the fifteen prime markets we track are now in a late downswing to early upswing, implying that the retail market will improve in the coming 12-month period,” it added.

A positive near-term outlook is also anticipated, fueled by recovering international travel and decreasing inflation, boosting consumer spending and the retail sector.

READ MORE: Economic concerns weigh on Shanghai’s retail property recovery

In 2024, most prime Asia Pacific shopping center markets expect rental increases of 0-5% year-on-year (YoY), with Kuala Lumpur potentially seeing a 10% YoY upside. 

However, rents in top-tier Chinese cities may remain flat, with possible declines in Guangzhou, Shenzhen, and Hong Kong.

Moreover, a surge in new retail space, totaling six million square meters, is also projected for the Asia Pacific region between 2024 and 2025, with 78% concentrated in the four tier-1 Chinese cities. 

Looking to 2025, a soft L-shaped recovery is projected, with rental increases of 0-5% expected across most markets, except for Chinese cities, which may continue to face pressure.

“Despite the weakness we have seen in certain parts of the region, Asia Pacific continues to offer immense potential in the mid to long term,” the report said.

 It is anticipated that nine of the world's top 20 consumer markets will be situated in Asia Pacific by 2030.