Retail Cities in Asia Pacific

Retail Cities
in Asia Pacific
The new retailers
in town
joneslanglasalle.com/asiapacific
“The retail sector in Asia Pacific
is witnessing rapid change and one
of the driving forces is the aggressive
expansion of international retailers
throughout the region. Our second
edition of Retail Cities in Asia Pacific
highlights many of these new market
entrants together with other trends
shaping the retail landscape.
We hope you enjoy it.”
Dr Jane Murray
Head of Research – Asia Pacific
Contents
02
Making Mall Marketing Interactive
04
06
Redefining a Retail Network
Market Statistics
Is Shopping Centre Ownership Going Global?
08
10
City Profiles
10 Hong Kong
11 Beijing
12 Shanghai
13Guangzhou
14Tokyo
15Singapore
16Bangkok
17Jakarta
18Delhi
19 Mumbai
20Sydney
21 Melbourne
Retail Track Record
22
Hong Kong
Beijing
Shanghai
Guangzhou
Tokyo
7.1
15.6
20.2
10.8
37.2
9.1%
11.9%
9.0%
16.7%
2011 Population
(mil)
• Just over half of the world’s population lives in Asia Pacific. That is 3.8 billion people, of which 1.7 billion currently live in cities.
• The region’s urban population is set to rise to 2 billion by the end of the decade. Combine that with rapid economic growth in many countries and the result is a meteoric rise in wealth levels.
Nominal Retail Sales
(Y-o-Y % Growth)
• Asia Pacific is also home to some of the world’s wealthiest nations, with Australia, Hong Kong, Singapore and Japan in the top 30 in terms of per capita income.
• International luxury and mid-range retailers are aggressively growing their businesses in these rapidly transforming markets.
Total Stock (mil sqm) as
at end-2012
2013 to 2017 New Supply
Additions as % of Stock
-1.1%
+46%
• With rising affluence comes large scale development of retail stock. Across the region’s major retail markets, prime retail stock currently sits at 80 million sqm and is forecast to rise by another 55 million sqm in the next five years. Of this, 20% will be built in Asia’s Tier I markets and a staggering 75% or 40 million sqm in the Tier II markets of China. +28%
+3%
3.6
+64%
4.5
7.5
1.7
n/a
Retail Investment Trends
• As the retail sector grows and matures, real estate investors in Asia Pacific are increasingly focusing on retail assets. In 2012, USD 22.8 billion of retail property was transacted across the region.
• The top retail investment destinations are currently the mature markets of Hong Kong, Japan and Australia. In the coming years, we predict that interest in the region’s emerging
markets will continue to grow and China will become Asia Pacific’s number one retail investment destination by 2020. The Jones Lang LaSalle Asia Pacific Research team provides
in-depth coverage of 42 retail markets in 11 countries.
Market Statistics
Market Statistics
Singapore
Bangkok
Jakarta
Delhi
Mumbai
Sydney
Melbourne
5.2
8.4
9.8
22.7
19.7
4.5
4.0
22.6%
14.9%
n/a
n/a
0.9%
-0.3%
-1.5%
+22%
+15%
+43%
1.9
1.8
1.3
Sources
City Population: World Urbanization Prospects, United Nations: The 2011 Revision
Retail sales: various government websites
Retail stock and supply additions: Jones Lang LaSalle (Real Estate Intelligence Service), 4Q12
+39%
2.1
+19%
1.7
+6%
3.0
+12%
2.5
Notes Retail sales growth: Bangkok refers to Thailand, Sydney (New South Wales) and Melbourne (Victoria).
Full year figure for Shanghai, December for the rest. Stock/supply figures refer to prime retail centres for
Asian cities and regional/sub-regional centres for Australian cities.
03
Making Mall
Marketing
Interactive
The creative application of modern
technology offers new opportunities
for engaging customers and building
marketing partnerships.
Making Mall Marketing Interactive
Shopping centres have always been unique venues for connecting brands and consumers.
Today, advances in mobile technology are diversifying the nature of that relationship.
Owners can now consider their retail asset as both a theatre of experiential interaction and
a social media platform.
During Christmas 2012, shoppers at two Mosaic malls, a new retail centre concept that
is being launched across China, were presented with a new form of marketing promotion
– interactive video games. In the Mosaic Dalian Mall and Mosaic Changsha Mall, the
initiative drew sizeable crowds of shoppers eager to participate.
Large screens were erected in prominent positions and customers were invited to take part
in a live video game controlled via their mobile phones. Shoppers, who participated, shot
fireworks onto a screen to target various moving prizes. Upon winning a prize, competitors
completed a short survey on their phone and mall staff distributed the gift.
For participants, the immediate activation using a scanned QR code and multi-user video
game format meant they did not have to wait in line to play. Viral appeal was also created
by the remote control nature of the game, as players invited friends and colleagues by SMS
messages to come and join in.
“The objective of interactive
promotions like this is to
differentiate a mall in an
increasingly competitive
environment and extract
more value from the
common areas of a mall,”
says Marcus Dee, Associate
Director, Retail Asset
Management, Greater
China, Jones Lang LaSalle.
“Entertaining shoppers
adds real value to their
experience. For owners, it
creates new advertising
channels and brand
partnership opportunities,
plus the capability to collect
consumer data in a noninvasive way.”
“The objective of interactive
promotions like this is to
differentiate a mall in an
increasingly competitive
environment and extract
more value from the common
areas of a mall”
Marcus Dee
Associate Director, Retail Asset Management, Greater China
Jones Lang LaSalle
Interactive marketing is well suited to Asia Pacific, where malls are popular leisure
destinations and technology adoption rates are high. China, for example, is now the world’s
largest market for active Android and iOS smartphones and tablets, according to a 2013
report by research firm Flurry Analytics, making their use even more relevant to the mall
industry.
The trend has global roots. In 2009, after the financial crisis, shopping malls in the United
States began looking for technology-based mechanisms to engage shoppers. Multimedia
and gaming events grew in popularity because they can be tailored to each mall layout.
Applied software enables owners to update ads and promotions in real time and garner key
data, while customers enjoy the competition and post-game score rankings.
The San Francisco-based International Experiential Marketing Association (IEMA) believes
technologically enlightened and empowered consumers now desire experiences that are
“personally relevant, memorable, sensory, emotional and meaningful.” The IEMA says
marketing that engages people with individual experiences that have tangible benefits “is a
fundamental basis for the future of marketing strategy”.
Michael Yuann, founder of Shanghai-based Game Concourse, which developed the
software for the gaming events in Dalian and Changsha, believes the opportunities for
interactive mall marketing are still in their infancy.
“This is a new frontier, both for the software and gaming industries and mall owners, that
rides on the tails of social network applications,” says Yuann. “To the user, the objective is
simple: entertainment. But the range of interactive advertising and marketing capabilities
being opened up make this type of promotion so attractive.”
Game Concourse aims to roll out new game formats in different mall locations, and is
working with Jones Lang LaSalle on the next generation of consumer interaction. “We want
to use interactive marketing to add even greater value for mall owners,” says Marcus Dee.
The new project will embed several display screens in malls that customers can constantly
interact with as they are walking through the public areas. “In this way, it’s possible to
gradually gather data that builds pictures about consumer behaviour and buying habits.
This information can be used to drive new marketing initiatives,” says Dee. “At the
same time, interactive advertising content can generate extra revenue and help build
partnerships between malls, brands and outside sponsors.”
05
Is Shopping
Centre Ownership
Going Global?
Retail property investors are eyeing
opportunities beyond their core
markets, and the fast-growing
economies of Asia Pacific are top of
the shopping list.
Jones Lang LaSalle sold the debt secured over Top Ryde City (Sydney) for USD 359 million to Blackstone on a yield of 7.3%.
Is Shopping Centre Ownership Going Global?
The globalisation of retail brands in recent years is helping to reshape the way owners and
operators of retail property behave. Western retailers are continuing to extend their reach
to tap into strengthening consumer demand across Asia Pacific, with sales growth of their
Asian portfolios frequently exceeding their home markets. This trend is not just one way;
first-mover Asian brands are simultaneously entering mature retail markets beyond the
region. As these ambitious retailers embrace transnational opportunities, will the owners
and operators of shopping malls follow suit?
The strength and underlying growth prospects of retail markets in key Asian economies
is attractive for investors. Jones Lang LaSalle’s Global Capital Flows research illustrates
that international capital is being invested to take advantage of projected growth. Since
2010, approximately 35% of the total US$65bn of retail transactions in Asia Pacific was
undertaken by non-domestic parties, of which 29% was comprised of buyers from outside
the region. This investment has largely taken the form of international funds partnering with
domestic or regional developers and owners.
Given Asia’s ongoing
retail sector boom and
the internationalisation
of retailers and capital, a
greater push into the region
by major retail property
operators may have been
expected. Whilst the global
heavyweights, such as Lend
Lease and Simon Property
Group, do have a presence
in Asia, it is small relative to
the market and each of their
respective portfolios, yet
Westfield is conspicuous by
its absence.
“As markets mature across
the region, shopping centres
developed or repositioned by
experienced retail specialists
are expected to outperform
the competition.”
David Raven
Regional Director of Retail Investment, Asia Pacific Capital Markets
Jones Lang LaSalle
“The primary challenges for specialist operators entering Asia Pacific markets include the
difficulty in accessing appropriate stock, regulatory restrictions, finding appropriate local
partners, the high cost of setting up large local teams to manage a ‘hands on’ real estate
sector and the required critical mass of malls to justify high set-up costs,” says David
Raven, Regional Director of Retail Investment, Asia Pacific Capital Markets, Jones Lang
LaSalle. “The relative pricing of Asian markets, the capital structures of these operators
and the sheer weight of capital required are also inhibiting factors.”
Despite these challenges, it’s widely believed that the experience and expertise of
global retail operators could benefit certain markets in the region. These groups are also
observing the approaches of experienced Asian developers, such as CapitaLand, SM
Group, Swire and Lippo, who have successfully developed retail assets across borders
within the region.
Evolving market dynamics could catalyse activity by large retail operators. As the
development pipeline in most Asian countries is delivered, greater competition will exist
between malls. Heightened competition will give consumers extra choice and highlight the
differences between the leading and less successful malls in each market. Over time, this
will drive the requirement for specialist repositioning and managerial skills to achieve and
maintain success.
“As markets mature across the region, shopping centres developed or repositioned
by experienced retail specialists are expected to outperform the competition,” says
David Raven. “We foresee an increasing trend of asset level strategic joint ventures
being established between owners and operators with international retail expertise and
relationships with both global retailers and global capital.”
Asia Pacific’s fastest growing markets, such as China, offer considerable scope for retail
asset partnerships. Other countries are also attracting interest. Lend Lease’s recent
announcement that it is partnering with Malaysian developer S P Setia to open the Setia
City Mall near Kuala Lumpur in 2013 could be a sign of things to come across the region.
It is expected that global retail operators could deliver superior returns for investors and
partners through leveraging their relationships with international retailers, operating
malls with greater efficiency and utilising their specialist experience in designing and
repositioning malls. Growing a presence in the region could also strengthen relationships
with ambitious Asian brands that can be exported to the global operators’ core portfolios.
07
Redefining
a Retail
Network
The increasingly competitive nature of
retail real estate in Asia Pacific means
acquiring desirable sites can be a
challenging process.
Redefining a Retail Network
The evidence of Asia Pacific’s consumer boom is around us. Retail development is
galvanising many cities and multiple-channel advertising bombards consumers. To meet
diversifying demand, global and domestic retailers are devising strategies to enhance their
market penetration. But whether a brand is rolling out new stores or adapting formats to
meet changing market contexts, retail network planning is an evolving process.
“There are certain key supply side challenges in Asia Pacific that impact retail decisions,
particularly in central locations. These include shopping centre waiting lists, rising rents,
short-term leases, lack of security of tenure, high fit-out costs and capital depreciation,”
says Iain Mackenzie, Head of Solutions Development, Asia Pacific, Jones Lang LaSalle.
“These factors are contributing to the complexity of shaping a retail network.”
US-based lifestyle brand Tommy Bahama entered Asia Pacific with four outlets in Australia,
and in 2012 opened debut stores in Macau, Hong Kong and Singapore. Tokyo and Yokohama
will follow in 2013. A big challenge has been finding sufficient space. “In the United States,
our average store size is
3,000-4,000 square feet.
In Asia, our minimum
requirement is 2,500
square feet, but that is
hard to achieve as mall
units are smaller,” says
Raymond de Malherbe,
Senior Managing
Director, Tommy Bahama
International.
As a new brand to the
region, it is focusing on
high-traffic locations.
“We need spaces that
enable us to position
ourselves so the Tommy
Bahama lifestyle can be
easily understood and
enjoyed. We invest a
lot of time and effort in
our window and store
displays to present our
product lines,” says
Brian Pearce, Managing
Director, Tommy Bahama
Asia.
“There are certain key supply
side challenges in Asia Pacific
that impact retail decisions and
contribute to the complexity
of shaping a branch retail
network. These factors include
shopping centre waiting lists,
rising rents, short-term leases,
lack of security of tenure,
high fit-out costs and
capital depreciation,”
Iain Mackenzie
Head of Solutions Development, Asia Pacific
Jones Lang LaSalle
Store format also influences the location. Tommy Bahama’s store in Wanchai, Hong Kong
sells men’s and women’s apparel and home accessories and features a bar and café, and
the Ginza retail store in Tokyo will include two bars and a restaurant. “The Hong Kong retail
and bar concept is a prototype, and we would like to do more of those,” says Pearce. “This
format is better suited to a street location, but as we become more established we want to
have multiple stores in key cities, and will create formats to fit each location.”
With an established presence in 22 countries across Asia Pacific, the challenges facing
Standard Chartered Bank are different. As the banking industry responds to rapid changes
in technology and consumer behaviour, retail bank networks are assuming a different role.
“The banking industry is very dynamic, and banks are changing to meet the needs of
markets, consumers and regulators. Retail banks now are focused on sales and income not
just service, so there is a need to reposition and resize to create network assets that have
an interconnection with each other,” says David Rees, Head of Project Management and
Design, Group Real Estate, Standard Chartered Bank.
Asian consumers are moving towards debit and credit and away from cash, and in some
countries mobile money – enabling funds to be transferred using mobile phones – is gaining
traction. Consequently, the long-held notion of a bank branch offering tellers and ATMs is
being challenged. “New bank formats have a focus on interactive technology and advice
and consultancy services rather than traditional teller transactions,” says Rees.
Location decisions are being reassessed accordingly. “For the spaces we want, which are
typically between 1000-1500 square feet, we are competing with consumer brands that sell
a lot of product,” says Rees. “So we must benchmark our branch needs against brands
that can move quickly, rather than against other banks who must seek the same regulatory
approvals as we do before opening a branch.”
09
10 Retail Cities | Hong Kong
4Q 2012 Highlights
Hong Kong
Sales growth of 9.8% in 2012 suggests Hong Kong’s retail sector is
in vibrant health. One of the world’s premier shopping destinations,
Hong Kong is a magnet for global brands targeting affluent local
shoppers and tourists, especially from Mainland China. Many
retailers now view their city flagships as showrooms for expanding
into China.
Luxury brands and high-street stores are locked in competition for
prime sites at The Landmark, Harbour City, Times Square and ifc
malls, plus high-traffic locations on Queen’s Road in Central and
Canton Road in Tsimshatsui. Continued rental growth in downtown
Hong Kong has resulted in an overspill into previously non-core
areas. Clusters of luxury and fashion brands are emerging on
Wellington Street in Central, Johnston Road in Wanchai and Peking
Road in Tsimshatsui, while fashion retailers are also moving into
malls in decentralised areas like Shatin and Tuen Mun.
demand
Retail sales growth improved in
4Q12, rising 7.6% y-o-y compared
with 5.8% y-o-y in 3Q12.
Growth in tourist arrivals moderated,
down to 15.1% y-o-y in 4Q12 from
17.7% growth recorded in 3Q12.
Prime shopping locations continued
to draw considerable interest from
luxury international brands.
RETAIL STOCK
COMPLETIONS
V City, a new 269,000 sq ft shopping
centre in Tuen Mun was completed
in 4Q12 and is scheduled to open in
2Q13.
Future Supply
A non-prime shopping centre in
Repulse Bay, The Pulse (147,693
sq ft), completed in 4Q12 and is
scheduled to open in 1Q13.
supply
10
146
99
29
76
24
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
New Retailers
in 2012
Abercrombie & Fitch
Alexander McQueen
Black Fleece by Brooks Brothers
Breitling
Cos
Forever 21
Hackett
Hollister
Tommy Bahama
Vera Wang
Notable Deals in 2H12
Leasing Transactions
Longchamp – 8,000 sq ft, Silvercord
GAP – 15,800 sq ft, MPM
Breitling – 10,000 sq ft, 517-519 Hennessy Road
Asset
Performance
Financial Indices
HIGH STREET SHOP
RENTS RISE
SECONDARY LOCATIONS SEE
STRONGER DEMAND
CAPITAL INFLOWS LIFT
TRANSACTION VOLUMES
High Street shop
rents grew by 2.4%
q-o-q in 4Q12.
High rents in core areas
continued to drive leasing
demand into fringe streets
and non-core areas; rents in
overall prime shopping centres
increased by 2.1% q-o-q in 4Q12
and 1.8% q-o-q in premium
prime shopping centres.
Investment activity pickedup noticeably in 4Q12
on the back of capital
inflows arising from further
stimulus in the US and the
announcement of more
austerity measures in the
city’s residential sector.
Rental information
Investment Transactions
Park Hotel Shopping Arcade – (70,000 sq ft) in
Tsimshatsui sold for HKD 2.2 billion
Katherine House – (49,500 sq ft) in Tsimshatsui sold for
HKD 780 million
Laguna Plaza – (163,611 sq ft) in Lam Tim sold for HKD 1.5
billion
12-Month Outlook
High Street Shops
Rental Value^ HKD 709.3 psf pm
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 15
^ net, on GFA
Rental Value
High Street Shops
Overall Prime Shopping Centres
Rental Value^ HKD 149.6 psf pm
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 13
^ net, on LFA
Capital Value
High Street Shops
Note: Hong Kong Retail refers to Hong Kong’s overall Prime Shopping Centre and High Street retail markets.
Source: Jones Lang LaSalle
RV Index (High Street Shops)
0
28
CV Index (High Street Shop)
RV Index (Premium
Prime Shopping
Centres)
RV Index (Overall
Prime Shopping
Centres)
0
24
0
20
0
16
0
12
80
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12 MONTH OUTLOOK
IMPROVING
ECONOMIC OUTLOOK
MAINLAND CHINESE
VISITORS TO SUPPORT
RETAIL SALES
MODERATE GROWTH
EXPECTED IN RETAIL RENTS
A stronger growing
domestic economy
should lend support
to the city’s retailing
market in 2013.
Retail sales are expected
to be well supported by
the sustained growth in
Mainland Chinese visitor
arrivals, which grew by
24.2% y-o-y in 2012.
The changing profile of
Mainland Chinese tourists
is likely to result in more
moderate retail sales growth.
As such, we expect retail
rents to rise in 2013 albeit at
a more moderate pace, in the
range of 0-10%.
Retail Cities | Beijing
4Q 2012 Highlights
Beijing
The evolution of Beijing’s retail landscape has closely followed the
redevelopment of the Chinese capital both before and since the 2008
Olympics. Previously overshadowed by Shanghai in terms of retail
cachet, Beijing is now pivotal to the China expansion strategies of
international retailers. An entire spectrum of consumer brands is
now delivering extravagant campaigns targeting discerning shoppers
in both downtown and decentralised areas.
Well-managed malls in large mixed-use developments, such as
Seasons Place, Oriental Plaza, Wanda Plaza, Solana and China
Central Place, offer appealing locations for both brands and
shoppers. Hip shoppers are attracted to The Village at Sanlitun, a
central Beijing precinct offering edgy consumer brand stores, eclectic
dining and entertainment. Newer shopping centres, such as Indigo
in Jiuxinqiao and Xin’ao Shopping Centre in the 2008 Olympic
Park, attract a mixed clientele, including younger consumers – an
increasingly influential China demographic.
demand
F&B, fashion, jewellery, and
household retailers were the largest
contributors to net take-up in 4Q12. Fashion retailers were keen to
introduce more sub-brands to
create more sales opportunities.
During 4Q12, luxury brands
preferred opening watch stores to
apparel stores.
RETAIL STOCK
COMPLETIONS
Parkview Green, a high-end
shopping mall in the CBD was
launched in 4Q12, adding 56,000 sqm
(GFA) to the market.
Future Supply
Zhuozhan Shopping Centre (GFA
300,000 sqm), a department store,
opened in the West Changan Street
submarket.
supply
New Retailers
in 2012
Alexander Wang
American Apparel
Baker
Cos
Forever 21
Harman
Hollister
Patagonia
Springfield
Toys R Us
772
386
767
236
520
335
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
No major investment deals in 2H12.
Forever 21 – 2,500 sqm, Beijing APM
Esprit – 1,300 sqm, Solana
Apple – 2,300 sqm, Beijing APM
Asset
Performance
Financial Indices
STRONG RETAILER
EXPANSION
LANDLORDS FOCUS ON
IMPROVING TENANT MIXES
CORE & URBAN MARKET
RENTS RISE
Retail sales
increased 11.9%
y-o-y in December.
Retailers maintained
a strong pace
of expansion
throughout 2012.
Experienced landlords executed
more effective rent revenue
strategies by improving their
tenant mixes. They replaced
low-profit-margin tenants with
tenants with a limited presence
in other malls to differentiate
themselves.
At end-2012, average rents
in the urban & core markets
rose 8.7% & 10.1% y-o-y,
respectively.
Rental information
Urban Prime Shopping Centres
Rental Value^ RMB 762 psm pm
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 12
^net effective, on NLA
0
16
0
14
0
12
Rental Value Index
0
10
80
Capital Value Index
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Urban Prime Shopping
Centres
A REBOUND IN RETAIL
SALES EXPECTED
RENTAL GROWTH LIKELY
SIMILAR TO 2012
NEW SUPPLY CONCENTRATED
IN PRIME LOCATIONS
A rebound in retail sales
is expected in 2013
in light of improving
macro-economic data,
falling credit card fees
and lower tariffs on
imported goods.
Average net effective
rents will continue
growing at a double digit
rate in 2013.
A large portion of new urban
projects in 2013 will be in
prime locations. Meanwhile
the suburban market is
expected to become an
emerging hot-spot.
Capital Value
Urban Prime Shopping
Centres
Note: Beijing Retail refers to Beijing’s Urban Prime retail market.
Source: Jones Lang LaSalle
11
12 Retail Cities | Shanghai
4Q 2012 Highlights
Shanghai
China’s most exciting and diverse retail city boasts sophisticated
shopping on both sides of the Huangpu River that bifurcates
Shanghai. In downtown Puxi, international and local brands vie
for prime storefronts along the Nanjing Road and Huaihai Road
thoroughfares. Luxury brand flagships are also magnetised to
premium locations in Xintiandi and the restored heritage mansions
along the riverfront Bund. Chic Shanghai mall shopping is popular,
especially for high-end fashion brands in the smart surrounds of
Plaza 66, Réel and Hong Kong Plaza.
Across the river, Pudong’s Super Brand Mall and ifc Mall offer
designer shopping and smart dining in the Lujiazui commercial
district noted for its dramatic skyline. Shanghai’s vast urban
sprawl also offers plentiful retail development opportunities in
decentralised areas, both east and west of the Huangpu River, and
in the many satellite towns that are now connected by the city’s
extensive subway network.
demand
Growing competition from online
retail for Shanghai’s increasingly
price-sensitive consumers.
For shopping centres, the gap
between the market winners and
losers widened in 4Q12.
International brands continue
to open in Shanghai but are
increasingly sensitive to the profit
potential of each store.
Future Supply
Réel Department Store (45,700 sqm)
and Takashimaya Department Store
(61,000 sqm) were completed in
4Q12.
RETAIL STOCK
COMPLETIONS
In the decentralised market, three
community malls opened.
supply
New Retailers
in 2012
200
35
278
55
71
385
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
10 Corso Como
Alexander McQueen
Carolina Herrera
De Beers
Forever 21
Harry Winston
Peuterey
Vera Wang
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
10 Corso Como – 3,000 sqm, Wheelock Square
Forever 21 – 7,000 sqm, The Bund Plaza
Abercrombie & Fitch – 800 sqm, Jing An Kerry Centre
Plaza 353 – (40,000 sqm) sold for RMB 2.37 billion
Channel One – (42,000 sqm) sold for RMB 1.46 billion
Asset
Performance
Financial Indices
SLOWER RETAIL SALES GROWTH LIMITS
RENTAL INCREASE
VACANCY RISES IN SELECT SHOPPING
CENTRES
On a like-for-like basis, rents in prime
and decentralised markets increased by
4.1% and 5.5% y-o-y, respectively.
Vacancy rates increased marginally
in some existing shopping centres as
several electronics stores and largeformat restaurants closed.
0
15
0
14
0
13
0
12
0
11
Rental Value Index
0
10
Capital Value Index
90
Rental information
Overall Prime Shopping Centres
Rental Value^ RMB 48.5 psm per day
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 14
^net, on NLA
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Overall Prime Shopping
Centres
SUBDUED RENTAL GROWTH
EXPECTED IN 1H13
PERFORMANCE GAP
AMONGST RETAILERS
TO CONTINUE
STRONGER PRECOMMITMENT FOR NEW
PRIME SUPPLY
As consumers remain
sensitive to prices, rental
growth is likely to be slow
through 1H13. Some mild pickup may take place in 2H13
if pro-consumption policies
are aggressively rolled out to
generate higher sales.
In a slower growth
environment, variance
of store performance is
likely to increase due to
locations and level of
experience of operators.
The gap in precommitment performance
between prime and
decentralised is widening,
leading to more potential
new completions with high
vacancy.
Capital Value
Overall Prime Shopping
Centres
Note: Shanghai Retail refers to Shanghai’s Overall Prime retail market.
Source: Jones Lang LaSalle
Retail Cities | Guangzhou
4Q 2012 Highlights
Guangzhou
The capital of southern China’s Guangdong province, Guangzhou
continues to benefit from the massive urban development
programme undertaken before the 2010 Asian Games. Greatly
enhanced infrastructure citywide has been accompanied by the
opening of a handful of prime retail centres. Global and local
retailers are also attracted to Guangzhou by its strong consumer
spending combined with a close proximity – and easy travel access –
to Hong Kong that have helped raise brand awareness.
The emerging riverside district known as Zhujiang New Town is
an appealing location for retailers because of its collection of new
luxury hotels, premium offices, dining and entertainment. The Mall
of the World, is scheduled to open here in 2013. Elsewhere in a city
famed historically for its street market culture, the top malls are
located in the Tianhe CBD.
demand
A slowdown in retail sales growth
curbed leasing activity.
In spite of a slowing retail market,
some well-known retailers showed
confidence in the growth of the
market, committing to new stores. Future Supply
Aoyuan Plaza (90,000 sqm), located
in Panyu district, was the only new
supply to be completed in 4Q12.
RETAIL STOCK
COMPLETIONS
supply
The remaining void in the newly
completed Aoyuan Plaza pushed the
overall market vacancy rate up to
3.1% by end-4Q12.
New Retailers
in 2012
California Fitness
Daiso Japan
Ippudo
Kiehl’s
MaxValu
Muji
5
40
302
120
290
541
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Sony – 2,800 sqm, TaiKoo Hui
Zara – 4,300 sqm, Rock Square
Jusco – 25,300 sqm, Rock Square
No major investment deals in 2H12.
Asset
Performance
Financial Indices
INVESTMENT
TRANSACTIONS
LIMITED IN 4Q12
FEW LANDLORDS SOUGHT
TO INCREASE RENTS
CAPITAL VALUES GROW
The limited availability of
saleable stock and firm
asking prices demanded
by vendors resulted in
few transactions being
recorded during the
quarter. Overall rents edged up
marginally in 4Q12 by 0.5%
q-o-q, close to the 0.4%
q-o-q growth recorded in
3Q12.
Coupled with the lower
interest rate environment,
market yields remained
broadly unchanged from
the previous quarter,
resulting in capital values
gaining by 0.5% q-o-q in
4Q12. Rental information
Overall Prime Shopping Centres
Rental Value^ RMB 446 psm pm
Stage in Cycle Rents Slowing
No. of Quarters Since Last Trough 14
^ net, on GFA
0
0
12
12-Month Outlook
Rental Value
Overall Prime Shopping
Centres
Capital Value
Overall Prime Shopping
Centres
Note: Guangzhou Retail refers to Guangzhou’s Overall Prime retail market.
Source: Jones Lang LaSalle
13
0
11
0
10
90
Rental Value Index
80
Capital Value Index
70
60
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12 MONTH OUTLOOK
IMPROVING ECONOMY
SHOULD AID RETAIL SALES
GROWTH
RECORD NEW SUPPLY
LIKELY LIMITS RENTAL
UPSIDE
INVESTMENT YIELDS TO
REMAIN BROADLY STABLE
The latest economic indicators
suggest that China’s economy
has troughed and is likely to
grow at a slightly faster rate
in 2013, which should help
underpin retail sales growth
and demand for retailing
premises.
Any upside on rents will
likely be restricted by
the record volume of
new supply due to be
completed in 2013. As
such, we expect rents to
grow by a further 6-7% in
2013.
Investment volumes are
unlikely to differ greatly
from 2012. Market yields
are expected to remain
broadly stable keeping any
movement in capital values
largely in line with rents.
13
14 Retail Cities | Tokyo
4Q 2012 Highlights
Tokyo
Few cities can compete with Tokyo for the colour, vibrancy and sheer
sense of theatre of its shopping experience. One of the world’s most
famous shopping cities, the Japanese capital offers an alluring mix of
grand malls, large department stores, sumptuously designed brand
flagships and boutiques.
Tokyo’s vast size means its shopping landscape is sub-divided
into distinctive districts. Ginza is a refined, upmarket area where
brand stores are interspersed between art galleries, restaurants and
cafes. Roppongi combines clusters of offices and deluxe hotels with
a pulsing nightlife and Roppongi Hills, one of Tokyo’s most popular
malls. Young consumers head to Shibuya and Shinjuku districts,
famed for their large departments stores and bright neon street
advertising. Omotesando’s offbeat street fashions appeal to youthful
hipsters and tourists, while Tokyo Bay’s large shopping malls offering
varied dining and entertainment options magnetises families on
weekends.
demand
In 4Q12, sales for large-scale retail
stores declined for the second
consecutive quarter, down 0.5%
y-o-y. The consumer confidence index
continues to be weak, declining for
the fourth consecutive month in
December.
Consumers remain concerned over
the economy, partly due to weak
exports.
Redevelopment of the former Hanae
Mori Building site in the Omotesando
area is due for completion in March
2013.
The Ginza 6-chome 10 District
Redevelopment Project, a 13-storey
building, is expected to begin
construction in 2014.
supply
New Retailers
in 2012
Bills
Kennel & Schmenger
Le Pain de Joel Robuchon
Rebecca Minkoff
The Conran Shop Kitchen
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Uniqlo – 9,990 sqm, Ginza Komatsu Building
Emporio Armani – 463 sqm, Oak Omotesando
Coach – 600 sqm, Oak Omotesando
Tokyu Plaza Harajuku Omotesando – (11,368 sqm) sold for
JPY 45 billion
G-Bldg. Omotesando – (1,508 sqm) sold for JPY 5.85 billion
Omotesando Gates Building – (1,300 sqm) sold for JPY 4.3
billion
Asset
Performance
Financial Indices
PRIME RETAIL RENTS RISE 0.5% q-o-q
IN 4Q12
CAPITAL VALUES EDGE HIGHER
At end-4Q12, rents for prime retail space
in Tokyo increased 0.5% q-o-q, reflecting
an increase in rents for space on some
higher floors. Strong investor demand underpinned
growth in capital values of 0.5% q-o-q
in 4Q12. 0
12
0
10
Rental Value Index
80
Capital Value Index
60
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
Rental information
12-Month Outlook
12 MONTH OUTLOOK
Ginza & Omotesando Prime Street Shops
Rental Value^ JPY 63,243
per tsubo per month
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 1
^gross, on NLA
Rental Value
Ginza & Omotesando
Prime Street Shops
ECONOMIC STIMULUS LIKELY TO
SUPPORT RETAIL SECTOR
MODEST GROWTH IN RENTS EXPECTED
The retail sector may receive an added
boost from a recently passed stimulus
package intended to spur economic
activity and create jobs.
In line with an improving economic
outlook, rents should rise moderately
in 2013. Capital Value
Ginza & Omotesando
Prime Street Shops
Note: Tokyo Retail refers to the Ginza and Omotesando Prime retail market.
No historical and/or forecast stock data available for Tokyo.
Source: Jones Lang LaSalle
Retail Cities | Singapore
4Q 2012 Highlights
Singapore
Singapore is an aspirational shopping destination for visitors from
across Asia Pacific and worldwide, in addition to boasting strong
domestic purchasing power. This appeal is recognised by the tourism
board, which heavily promotes its world-class malls and annual
Great Singapore Sale. Top of the shopping list for locals and tourists
is Orchard Road, an iconic strip of designer boutiques and glitzy
malls, such as Ion Orchard, Paragon and Wisma Atria.
Beyond downtown, Singapore’s retail scene is diversifying.
The redevelopment of Marina Bay into an office, shopping and
entertainment district features The Shoppes at Marina Bay Sands, a
smart mall offering luxury boutiques and emerging labels. Nearby,
the Suntec City Mall adjacent to the Suntec City Convention Centre
has received a major revamp. Retailers are also tapping into domestic
demand in decentralised areas, such as Dhoby Ghaut, and new
shopping centres in suburban locations.
demand
Occupancy remains tight, with
sustained interest from food and
beverage and fashion apparel
retailers. The Suburban submarket continued
to generate healthy interest from
retailers, both domestic and
international.
Retail sales in December (excluding
motor vehicles) declined by 0.4%
y-o-y.
RETAIL STOCK
COMPLETIONS
Plaza Singapura’s Extension (11,797
sqm) and 100AM (11,799 sqm)
rounded out 2012’s supply.
Future Supply
At over 80%, the pre-commitment
levels of both malls were healthy. supply
85
230
156
64
85
199
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
New Retailers
in 2012
A. Lange & Sohne
Carven
Costa Coffee
Crate & Barrel
J Lindeberg
Philip Stein
Smoothie King
Stella McCartney
Tommy Bahama
Tory Burch
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
H&M – 20,000 sq ft, ION Orchard
Crate & Barrel – 16,000 sq ft, ION Orchard
Mulberry – 4,000 sq ft, Mandarin Gallery
Nex – (617,214 sq ft) sold for SGD 825 million
Murray Terrace – (50,000 sq ft) sold for SGD 75 million
The Quayside retail units – (33,000 sq ft) sold for SGD 69 million
Asset
Performance
Financial Indices
RENTS REMAIN RELATIVELY STABLE
AVERAGE CAPITAL VALUES HOLD FIRM
The Marina submarket registered a
marginal decline of 0.1% q-o-q, while the
Orchard and Suburban submarkets were
unchanged.
Transaction volumes declined in 4Q12,
a traditionally slow investment period,
while average capital values remained flat
supported by strong domestic liquidity and
a low interest rate environment.
0
11
10
5
10
0
95
90
Rental Value Index
85
Capital Value Index
80
Rental information
Orchard Road Prime Shopping Centres
Rental Value^ SGD 4,204 psm pa
Stage in Cycle Rents Stable
No. of Quarters Since Last Trough 11
^net effective, on NLA
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Orchard Road Prime
Shopping Centres
INCREASING RENTALS EXPECTED BY
MID-2013
RISING BUSINESS COSTS COULD CAP
RENTAL GROWTH
The low unemployment rate and
improving economy should support
increasing rentals by mid-2013.
The rise in business costs, attributable
to Singapore’s strong currency and the
implementation of the dependency ratio
ceiling on 1 July 2012 for foreign workers
in the services sector, could cap further
rent increases.
Capital Value
Orchard Road Prime
Shopping Centres
Note: Singapore Retail refers to Singapore’s Prime, Suburban and Marina retail markets.
Source: Jones Lang LaSalle
15
16 Retail Cities | Bangkok
4Q 2012 Highlights
Bangkok
Thailand’s retail market is expected to grow by around 10 per cent
this year, and its capital boasts both strong consumption and global
appeal as a shopping destination. Brand-hungry shoppers from
home and abroad make for Bangkok’s stylish city centre malls,
such as Siam Paragon, Emporium, CentralWorld, Terminal 21 and
Erawan Bangkok.
New developments are also catching the eye. Signature 2012
openings included Mega Bangna, a 400,000 sqm mall featuring
Thailand’s first IKEA store, and Asiatique the Riverfront, which
combines a mall and night bazaar beside the Chao Phraya River
that runs through Bangkok. Commanding attention in 2013 will be
Central Embassy, a mixed-use residential and hotel development in
the heart of the capital that promises a retail mall with “just the right
mix of chic and swagger.” The development pipeline is expected to
continue, Siam Future is among the developers building community
malls in suburban Bangkok.
demand
In 4Q12, strong leasing demand in
prime retail centres was supported
by international brands.
No new prime projects completed
in 4Q12 and Silom Complex was the
only project to complete renovations.
Rising purchasing power has led
retailers to expand their customer
base to Thailand. RETAIL STOCK
COMPLETIONS
Central Embassy and Emquatier
(The Emporium II) are scheduled
to complete in 2013 & 2014
respectively.
The average vacancy rate increased
in 4Q12 to 6.8% as several prime
centres underwent renovations.
supply
New Retailers
in 2012
Alexander McQueen
Coffee Bean and Tea Leaf
Food Republic
H&M
Payless Shoesource
Stella McCartney
TWG Tea Salon & Boutique
Twinings Tea
187
43
298
681
154
2008
2009
2010
2011
2012
2013F
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
H&M – 3,300 sqm, Siam Paragon
Uniqlo – 1,780 sqm, Siam Paragon
Louis Vuitton – 450 sqm, Siam Paragon
Family Mart – (713 branches) sold for THB 3.12 billion
Merry King Rangsit Building – (20, 000 sqm) sold for THB
2 billion
Financial Indices
RENTS MOVE HIGHER
CAPITAL VALUES RISE 1.3% q-o-q
Supported by strong leasing demand
and higher achieved rents in renovated
projects, the average gross rent in 4Q12
was up by 1.3% q-o-q.
Supported by ongoing growth in rents,
capital values rose by 1.3% q-o-q,
reflecting the strong investment interest
in retail property.
0
11
5
10
0
10
95
90
Rental Value Index
85
Capital Value Index
80
Overall Prime Shopping Centres
Rental Value^ THB 21,159 psm pa
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 15
^net, on NLA
190
Completions in thousand sqm
Asset
Performance
Rental information
Future Supply
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Overall Prime Shopping
Centres
RETAIL MARKET OUTLOOK
SHOULD REMAIN POSITIVE
RENTS AND CAPITAL VALUES
EXPECTED TO GROW
The outlook for Bangkok’s retail market
should remain positive in 2013, given
growing domestic consumption and
strong leasing activity, especially among
international brands.
Rents are expected to rise and the
strong interest in owning retail assets
is forecast to see capital values also
rise.
Capital Value
Overall Prime Shopping
Centres
Note: Bangkok Retail refers to Bangkok’s Prime retail market.
Source: Jones Lang LaSalle
Retail Cities | Jakarta
4Q 2012 Highlights
Jakarta
Indonesia is home to Southeast Asia’s largest population and one of
the fastest growing economies in the world. Consequently, the retail
market in the capital Jakarta is considered to offer high potential,
and the shopping options and patterns of consumer behaviour are
continuing to diversify.
Jakarta’s leading malls include Plaza Indonesia, Grand Indonesia,
Plaza Senayan and Pacific Place, all of which target middle to upper
class spending power with a mix of mass market and luxury brands.
Adding an extra frisson of excitement will be the opening in 2013
of a three-floor department store by Paris-based Galeries Lafayette
at Pacific Place. A wave of real estate development has delivered two
major new mall developments, Kota Kasablanka and Ciputra World,
which is part of a large mixed-use complex featuring a luxury hotel,
residences and offices.
demand
Healthy economic growth and
robust domestic consumption
continued to support retail sales in
4Q12.
Net absorption totalled 22,000 sqm
in 4Q12, slightly above the average
level in the previous three quarters.
Strong demand resulted in mall
vacancy declining from 5.4% in 3Q12
to 3.7% by end-4Q12.
Future Supply
RETAIL STOCK
COMPLETIONS
There were no project completions
in 4Q12. Kota Kasablanka, which was
completed in 3Q12, was the only
addition to Jakarta’s prime retail
market in the year. supply
31
25
120
0
62
223
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
New Retailers
in 2012
Alfred Dunhill
Brooks Brothers
Furla
Michael Kors
New Look
Victoria’s Secret
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Central Department Store – 10,000 sqm, Grand Indonesia
Lotte Department Store – 80,000 sqm, Ciputra World
Jakarta
No major investment deals in 2H12.
Asset
Performance
Financial Indices
STRONG DEMAND HAS LIMITED
IMPACT ON RENTS
GROWTH IN CAPTAL VALUES
COMPRESSES YIELDS
Healthy demand growth has yet to trigger
significant rental increases as landlords
focus on attracting tenants to fill-up
vacant space. Overall, net effective rents
grew marginally by 0.8% q-o-q in 4Q12.
Capital values grew faster than rents at
1.4% q-o-q. This pushed yields to compress
by 10 basis points to 11.0% by end-4Q12.
11
0
8
10
6
0
1
4
10
2
0
1
0
10
98
Rental Value Index
96
94
Capital Value Index
92
90
Rental information
Overall Prime Shopping Centres
Rental Value^ IDR 4,895,968 psm pa
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 7^
^net effective, on NLA
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Overall Prime Shopping
Centres
THREE PROJECTS TO
COMPLETE IN 2013
VACANCY LIKELY TO
REMAIN STABLE
RENTS & CAPITAL VALUES
EXPECTED TO RISE
The retail market is expected
to receive 223,000 sqm of new
supply from three projects
(Lotte Shopping Avenue, St.
Moritz and Pondok Indah
Street Gallery) in 2013; almost
70% of these three projects
has been pre-committed. As we anticipate
demand to grow
steadily, the vacancy
rate is likely to remain
stable around the
current level (i.e. 4-5%)
in 2013.
Rents and capital values
are projected to pick up in
line with the increase in
retail sales.
Capital Value
Overall Prime Shopping
Centres
Note: Jakarta Retail refers to Jakarta’s Overall Prime retail market.
Source: Jones Lang LaSalle
17
18 Retail Cities | Delhi
4Q 2012 Highlights
Delhi
As India’s retail sector prepares to profit from relaxed rules
governing foreign direct investment by multi-brand retailers, Delhi
seems poised to be a leading beneficiary. India’s vibrant, capital city
encompasses several retail submarket spread across its sprawling
landscape. The favourite hangouts for local shoppers include DLF
Emporio, Select City Walk , DLF Promenade and Ambience Mall in
South Delhi, Ambience Mall in Gurgaon and Pacific Mall in West
Delhi.
Competition to attract affluent, brand-savvy capital shoppers is
increasing between retailers, especially in prime areas – and the
difference between high-quality retail projects and the less successful
malls is increasingly apparent. Rapidly growing outbound travel
is helping to boost sales for luxury retailers at Indira Gandhi
International Airport, the largest and busiest airport in South Asia.
demand
Limited vacancy in good performing
malls pushed retailers to pre-commit
in upcoming projects.
RETAIL STOCK
COMPLETIONS
MSX Central Market (285,000 sq
ft) in Greater Noida and Euro Park
(450,000 sq ft) in Ghaziabad opened
in 4Q12.
Absorption increased as small store
format retailers were active in 4Q12,
with net absorption recorded at
630,000 sq ft.
Future Supply
supply
New completions in the Suburbs
contributed nearly 97% of total
net absorption. Overall, vacancy
dropped to 24.1% in 4Q12.
180
168
229
310
99
153
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
New Retailers
in 2012
Armani Jeans Armani Junior
Burg
Dunkin’ Donuts
La Tagliatella
Nando’s Roberto Cavalli
Starbucks
Thomas Pink
Van Laack
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Hamleys – 36,000 sq ft, DLF Place Saket
Marks & Spencer – 18,500 sq ft, Moments Mall
No major investment deals in 2H12.
Asset
Performance
Financial Indices
RENTS STABLE
REVENUE SHARING
ARRANGEMENTS RISE
CAPITAL VALUES
HOLD FIRM
Overall, rents remained
stable in all submarkets
during the quarter.
Retailers resisted
rent increments and
favoured revenue sharing
arrangements over plain
lease agreements.
In line with stable rents,
capital values were also
relatively unchanged in
every submarket in 4Q12
and yields held firm.
0
11
0
10
90
80
70
Rental Value Index
60
Capital Value Index
50
Rental information
Prime South Shopping Centres
Rental Value^ INR 242 psf pm
Stage in Cycle Growth Slowing
No. of Quarters Since Last Trough 8
Rental Information is for the
Prime South only
^ gross, on GFA
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Prime South Shopping Centres
FDI INTO MULTI-BRAND
RETAIL LIKELY IN 2H13
STRONG DEMAND SHOULD
CONTINUE FOR NEW
PROJECTS
RENTS EXPECTED TO
MOVE HIGHER
As global retailers and
state governments decide
on where stores should
be located, it is expected
that the introduction of FDI
into multi-brand retail is
likely to take a 6-12 month
period to roll out.
Retailers are expected
to pursue deals in underconstruction projects that
offer good design, branding
and professional management,
as these features will likely
translate to healthy footfall and
positive business potential.
Sustained retailer interest
is likely to cause rents
to move upwards, while
lower vacancy supports a
rise in select submarkets.
Supply rationalisation
may ease the downward
pressure on rents.
Capital Value
Prime South Shopping Centres
Note: Delhi retail refers to Delhi’s Overall retail market.
Source: Jones Lang LaSalle
Retail Cities | Mumbai
4Q 2012 Highlights
Mumbai
India’s pulsing financial and commercial hub is also the nation’s
capital of style. Brand awareness among consumers is growing fast,
encouraging more global retailers and luxury and fashion brands
to tap into India’s edgiest retail market. Mall shopping is a popular
concept, and shopping centres such as Palladium at High Street
Phoenix, Atria, Inorbit and Oberoi Mall offer a sophisticated mix of
retail, dining and entertainment.
Mumbai is a vast city and the quality of mall developments in recent
years has varied considerably. Shopping centres in the suburbs
tend to offer better infrastructure and operational management in
addition to large residential catchment areas for retailers. A wave of
real estate development in 2011 caused an imbalance in supply, and
several underperforming malls have been retrofitted into standalone and high street style retail formats.
demand
RETAIL STOCK
COMPLETIONS
Net absorption increased in 4Q12 as
domestic retailers expanded to take
a first-mover advantage following a
change to allow FDI into multi-brand
retailing.
There was one completion in 4Q12,
Kaul Heritage City Mall (250,000 sq
ft) in Vasai.
Mumbai recorded total net
absorption of 217,000 sq ft in 4Q12
compared to 64,400 sq ft in 3Q12.
Future Supply
supply
Major leasing activity was
concentrated in the Suburbs
because of its quality malls,
infrastructure and vast residential
area.
349
130
228
334
88
123
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
New Retailers
in 2012
Kenneth Cole
Pizza Express
Starbucks
Superdry
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Marks & Spencer – 18,000 sq ft, Andheri West
Smoke House Deli – 2,115 sq ft, BKC
Pizza Express – 3,900 sq ft, Colaba
No major investment deals in 2H12.
Asset
Performance
Financial Indices
RENTS RISE IN THE PRIME SOUTH &
SUBURBS
SLIGHT INCREASE IN CAPITAL VALUES
Rents increased in the Prime South by
0.8% q-o-q in 4Q12 and in the Suburbs
by 1.0% q-o-q. Similar to 3Q12, a gradual
increase in occupancy in select quality
malls in the Suburbs raised average rents.
Capital values increased marginally across
all submarkets. However, the highest
growth in capital values was witnessed
in the Suburbs because of its growing
importance as an investment destination.
0
11
0
10
90
80
Rental Value Index
70
60
Rental information
Prime South Shopping Centres
Rental Value^ INR 244 psf pm
Stage in Cycle Rents Rising
No. of Quarters Since Last Trough 7
Rental Information is for the
Prime South only
^ gross, on GFA
Capital Value Index
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12-Month Outlook
12 MONTH OUTLOOK
Rental Value
Prime South Shopping
Centres
DEMAND FOR SMALLER
FORMATS TO PUSH
VACANCY LOWER
FDI SHOULD SUPPORT
THE RETAIL MARKET
RENTS & CAPITAL VALUES
EXPECTED TO GROW
Vacancy rates are
expected to decline in
the prime submarkets as
developers prefer small
standalone and mixed
development retail formats
instead of distinct larger
malls.
The opening of FDI into
multi-brand retail is likely
to boost the retail market
in the medium to long
term due to the entry of
international products,
practices and technology.
Rents and capital
values are likely to
increase gradually in all
submarkets, albeit by
varying degrees.
Capital Value
Prime South Shopping
Centres
Note: Mumbai retail refers to Mumbai’s Overall retail market.
Source: Jones Lang LaSalle
19
20 Retail Cities | Sydney
4Q 2012 Highlights
Sydney
Sydneysiders love to shop, and Australia’s largest city counts an
eclectic shopping environment befitting its status as a high-profile
international destination. Shoppers in Sydney can choose from a
diverse portfolio of smart malls, department stores, designer brand
flagships and homegrown fashions.
A large working population and a regular flow of tourists in the
downtown CBD creates a strong market for its distinctive shopping
centres, such as the historic Strand Arcade and Queen Victoria
Building, plus the recently refreshed Westfield Sydney. Retail outlets
also extend along George Street, the city’s main thoroughfare, and
are bookended by the busy China Town markets and precinct in the
south and The Rocks near to the Harbour Bridge in the north. The
waterside Darling Harbour is a popular shopping area for visitors.
Beyond the centre, the suburban districts of Bondi, Chatswood and
Parramatta also offer also offer diverse shopping experiences.
demand
RETAIL STOCK
COMPLETIONS
NSW retail turnover growth
accelerated in 2012 but remains
considerably below the long-term
trend.
Extensions were started at
Macquarie Shopping Centre (31,800
sqm) and DFO Homebush in 4Q12.
The average vacancy rate
decreased from 2.3% in 1H12 to 1.7%
in 2H12.
Future Supply
Completions in 2012 totalled 114,200
sqm, with Bulky Goods being the
dominant format (52%).
The leasing market remains
challenging and feedback indicates
enquiry levels remain low. supply
146
136
199
121
114
43
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
New Retailers
in 2012
Culture Kings
Marimekko
Poco Australia
Samsung
T.M. Lewin
Topshop / Topman
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Samsung – 212 sqm, 450 George Street
Topshop / Topman – 1,800 sqm, 455 George Street
Williams-Sonoma – 2,040 sqm, 466-472 Oxford Street
Top Ryde City – (77,060 sqm) sold for AUD 341 million
Bateau Bay Square – (29,162 sqm) sold for AUD 164
million
Centro Toormina – (21,337 sqm) sold for AUD 65.5 million
Asset
Performance
Financial Indices
RENTS DECLINE IN SOME
SUB-SECTORS
LEASING INCENTIVES
RISE
INVESTMENT MARKET
INCREASINGLY ACTIVE
Challenging leasing
conditions resulted in
a decline in rents in the
Regional ( 0.3% q-o-q) and
Neighbourhood (-0.8% q
o-q) categories. Average
rents were stable in the
CBD, Sub-regional and
Bulky Goods categories
in 4Q12.
Leasing incentives have
increased across all retail
formats throughout the
year to attract and retain
tenants. The retail investment
market has become
increasingly active with
four major sales recorded
in Sydney in 4Q12. Rental information
Regional Shopping Centres
Rental Value^ AUD 1952 psm pa
Stage in Cycle Rents Stable
No. of Quarters Since Last Peak 5
^ net, on NLA
0
12
0
11
10
0
Rental Value Index
90
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12 MONTH OUTLOOK
12-Month Outlook
Rental Value
Regional Shopping
Centres
Note: Sydney Retail refers to Sydney’s Overall retail market.
Source: Jones Lang LaSalle
RENTAL GROWTH TO
REMAIN BELOW TREND
SUPPLY PIPELINE
SHOULD BE LIMITED
MODEST YIELD
COMPRESSION EXPECTED
We expect leasing market
conditions to improve in
2013, but rental growth is
likely to remain below the
long term average trend in
the short term.
The projects currently
in the pipeline suggest
supply should be limited
in 2013 but development
conditions are improving.
The investment market
is likely to remain robust
and institutional demand
for core assets is expect
to result in some modest
yield compression
throughout the year.
Retail Cities | Melbourne
4Q 2012 Highlights
Melbourne
Melbourne is famed for its eclectic dining and colourful calendar
of festivities, and its claim to be the heartland of Australian style
and fashion is supported by growing global interest in the annual
Melbourne Fashion Festival. Melbourne boasts a vibrant and diverse
retail market, ranging from the artisans of Flinders Lane, the highend stores on Chapel Street and Collins Street to the Bourke Street
Mall and Chadstone the Fashion Capital.
To position Melbourne as an internationally recognised shopping
destination, the City of Melbourne teamed up with the Victorian
State Government to develop the six-year Melbourne Retail Strategy.
The initiative aimed to encourage the city’s retail sector to constantly
innovate and create campaigns that showcase Melbourne’s cultural,
artistic and commercial diversity.
demand
Retail turnover growth declined
0.3% y-o-y in December, reflecting
a slower state economy and labour
market.
RETAIL STOCK
COMPLETIONS
Supply rose to 221,550 sqm in 2012,
representing a 17% increase from
2011.
Melbourne’s average vacancy rate
was stable in 2H12 at 2.1% but the
results were mixed between retail
formats.
Future Supply
Four new projects completed in
4Q12 comprising three Bulky Goods
outlets and one Neighbourhood
centre. supply
New Retailers
in 2012
359
250
61
190
222
275
2008
2009
2010
2011
2012
2013F
Completions in thousand sqm
Gap
Marimekko
Samsung
Notable Deals in 2H12
Leasing Transactions
Investment Transactions
Topshop / Topman – 1,600 sqm, Highpoint Shopping Centre
Samsung – 380 sqm, Highpoint Shopping Centre
Zara – 2,400 sqm, Highpoint Shopping Centre
Centro Keilor – (19, 052 sqm) sold for AUD 67 million
Axis South Morang – (20, 000 sqm) sold for AUD 30 million
Laurimar Shopping Centre – (4,491 sqm) sold for AUD 19
million
Asset
Performance
Financial Indices
RENTS STABILISING
SEVEN MAJOR SALES
TRANSACT IN 4Q12
YIELDS REMAIN STABLE
Average specialty store
rents were unchanged
in Melbourne in 4Q12
across all retail formats.
The broad-based
slowdown is in line with
national trends in retail
rents.
Retail transactions totalled
AUD 292.1 million in 4Q12
and largely comprised of
Westfield’s acquisition of a
20% share in Westfield Knox
and 50% share in Casey
Central.
Prime equivalent yields were
stable across all retail formats
except Regional centres. The
median Regional centre yield
for Melbourne tightened from
6.50% in 3Q12 to 6.25% in 4Q12.
0
12
0
11
0
10
Rental Value Index
90
4Q
08
4Q
09
4Q
10
4Q
11
4Q
12
Index Base 4Q08 = 100
12 MONTH OUTLOOK
Rental information
Regional Shopping Centres
Rental Value^ AUD 1479 psm pa
Stage in Cycle Rents Stable
No. of Quarters Since Last Peak 0
^ net, on NLA
12-Month Outlook
Rental Value
Regional Shopping
Centres
Note: Melbourne Retail refers to Melbourne’s Overall retail market.
Source: Jones Lang LaSalle
MILD RENTAL GROWTH
ANTICIPATED
NEW SUPPLY
SIMILAR TO 2012
YIELDS EXPECTED
TO BE RELATIVELY STABLE
The Victorian economy and
retail turnover are forecast
to post a modest recovery
in 2013. Leasing market
conditions are therefore set
to improve and low vacancy
rates suggest some mild
upward pressure on rents.
The forward pipeline of
projects currently under
construction or with plans
approved suggests annual
supply should average
229,800 sqm over the next
three years. Average retail yields are
forecast to remain stable
despite robust investor
demand but there may be
further widening of the
yield range in some retail
sub-sectors.
21
Jones Lang LaSalle Retail Track Record:
Recent Highlights
China
Project Leasing
Rock Square, Guangzhou –
1,076,391 sq ft
The Fubon International,
Shanghai – 1,022,571 sq ft
The Starlife Plaza, Shanghai
– 1,184,030 sq ft
The Eco Island Project,
Nanjing – 376,737 sq ft
The Tiandi Hui, Wuhan –
1,076,391 sq ft
Leasing
Aeon, Guangzhou –
135,625 sq ft
ZARA, Guangzhou –
33,368 sq ft
I.T, Shanghai –
25,295 sq ft
India
Leasing
Marks & Spencer, Mumbai
– 18,000 sq ft
Reliance Hyper, Nashik –
75,000 sq ft
Pizza Express, Mumbai –
3,900 sq ft first transaction
as exclusive advisor
Marks & Spencer, New
Delhi – 18,500 sq ft
Hamleys, New Delhi – First
Hamleys store in Northern
India 36,000 sq ft
Starbucks, New Delhi –
5,000 sq ft, first store in
North India
Property and Asset
Management
Amanora Town Centre,
Pune – 1.1 million sq ft
Inditex (ZARA, Massimo
Dutti, Bershka and Pull &
Bear), Jilin – 3,484 sq ft
Centre Square, Cochin –
450,000 sq ft
Beijing Huanan Center,
Beijing – 807,300 sq ft
Centre Square Baroda,
Vadodara – 140,000 sq ft
Property and Asset
Management
Gulmohar Park, Ahmedabad
– 220,000 sq ft
Macquarie Group –
5.3 million sq ft across 9
shopping centres
Singapore
The Starlife Plaza, Shanghai
– 1,184,030 sq ft
Leasing
Rock Square, Guangzhou –
1,076,391 sq ft
Capital Markets
Everbright Mall, Guangzhou
– sold for USD 318 million
Tianxing Roosevelt Mall,
Dalian – sold for
USD 330 million
Hamleys, New Delhi
Thailand
Project Leasing
Automall Rangsit, Pathum
Thani – 473,612 sq ft
Leasing
Wine Connection, Phuket –
4,521 sq ft, Banana Walk
Villa Market, Phuket –
4,854 sq ft, Banana Walk
The Fubon International, Shanghai
Hong Kong
Pure Yoga– 11,507 sq ft and
anchor tenant for Chevron
House
Leasing
Longchamp – 8,000 sq ft,
Silvercord
Tommy Bahama – new to
market brand 1,959 sq ft
GAP – 15,800 sq ft, MPM
Capital Markets
Breitling – 10,000 sq ft,
517-519 Hennessy Road
NEX – 617,214 sq ft sold for
USD 662 million
Murray Terrace –
50,000 sq ft sold for
USD 60 million
The Quayside retail units –
33,000 sq ft sold for
USD 55 million
Hougang Plaza –
79,640 sq ft sold for
USD 96 million Capital Markets
Westlands Centre – G/F
shop 1 sold for
USD 33 million
Yen Lok Building – various
portions sold for a total of
USD 13 million
Property and Asset
Management
Banana Walk, Phuket –
129,167 sq ft
NEX, Singapore
Longchamp, Hong Kong
Wine Connection, Phuket
Project Leasing
58.21
million sq ft
Leasing
Property and Asset
Management
15.07 144,571,103
million sq ft
million sq ft
Capital markets
> USD
3.22
billion in transactions
Retail Track Records
Australia
Leasing
Telstra, Brisbane – 1,340 sq ft
Mos Burger, Brisbane – first
CBD store 1,722 sq ft
Korea
Project Leasing
Signature Tower, Seoul –
39,975 sq ft
T-Avenue, Seoul – 10,778 sq ft
Guzman y Gomez – largest
store in Australia 3,767 sq ft
Capital Markets
Federation Centres Portfolio
(formerly Centro) – 50%
stake sold in three regional
shopping centres across
Australia for USD 722 million
(Galleria WA, The Glen Vic
and Colonnades SA)
T-Avenue, Seoul
Myer Centre, Brisbane
(50%) – 683,293 sq ft sold for USD 383 million
Top Ryde City, Sydney–
829,467 sq ft sold for USD 356 million
Property and Asset
Management
Batemans Bay Shopping
Centre, NSW – 226,042 sq ft
Kensington Village
Shopping Centre, VIC –
64,583 sq ft
Horsham Plaza Shopping
Centre, VIC – 135,625 sq ft
Shopping Centres of
Australia Trust (SCA) –
management of 50 shopping
centres across Australia
totalling over 3,767,369 sq ft
New Zealand
Leasing
ANZ Wellington, 22-26 Willis Street 5,640 sq ft
Metro Centre, 291-297
Queen Street, Auckland – 26,910 sq ft
Capital Markets
Kelston Shopping Centre,
Auckland – USD 24 million,
232,156 sq ft
Porirua Mega Centre,
Wellington – 436,099 sq ft
sold for USD 25 million
Property and Asset
Management
Eastgate, Christchurch –
290,626 sq ft
Merivale Mall, Christchurch
– 80,729 sq ft
Top Ryde City, Sydney
Kelston Shopping Centre, Auckland
Measurements are represented in square feet, rounded up to the nearest figure. Quoted values have been converted to USD rounded up to the nearest figure and correct as of 25 March 2013.
23
Retail opportunities in every square
It takes perspective and expertise to stay ahead. Jones Lang LaSalle combines
in-depth local knowledge with far-reaching global insights to help you discover
hidden opportunities.
With our retail intelligence and integrated platform of leasing, management and
capital markets, we provide solid advice that will maximise your investment.
From the high street to out of town, from mini-mart to mega-mall, we measure
value the same way… one square at a time.
joneslanglasalle.com/asiapacific
Asia Pacific
Anuj Puri
Head of Retail, Asia Pacific
Chairman and Country Head, India
[email protected]
Korea
Jay Kwon
Head of Retail
[email protected]
David Raven
Retail Investment [email protected]
Macau
Gregory Ku
Country Head
[email protected]
Australia
Tony Doherty
Head of Retail, Property and Asset Management
[email protected]
New Zealand
Alistair Penny
Property and Asset Management
[email protected]
Cameron Taudevin
Retail Leasing
[email protected]
Chris Beasleigh
Retail Sales and Leasing
[email protected]
China
Eugene Tang
Head of Retail
[email protected]
Philippines
Lizanne Tan
Tenant Representation
[email protected]
Colin Dowall
Head of Retail Asset Management
[email protected]
Singapore
Hannah MacDonald
Head of Retail
[email protected]
Hong Kong
Tom Gaffney
Head of Retail
[email protected]
India
Pankaj Renjhen
Retail Leasing
[email protected]
Shubhranshu Pani
Retail Leasing
[email protected]
Indonesia
Angela Wibawa
Retail Leasing
[email protected]
James Austen
Retail Leasing
[email protected]
Japan
Midori Suzuki
Co-Head of Property and Asset Management
[email protected]
Taichi Iio
Head of Retail, Property and Asset Management
[email protected]
Taiwan
Steve Lee
Retail Leasing
[email protected]
Thailand
Suphin Mechuchep
Country Head
[email protected]
Krid Jarungruk
Retail Leasing
[email protected]
Vietnam
Trang Bui
Leasing and Tenant Representation
[email protected]
Thu Phan
Capital Markets
[email protected]
Jones Lang LaSalle Asia Pacific
Asia Pacific
www.joneslanglasalle.com/asiapacific
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China
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Hong Kong
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India
www.joneslanglasalle.co.in
Indonesia
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Japan
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Korea
www.joneslanglasallekorea.co.kr
Macau
www.joneslanglasalle.com.mo
New Zealand
www.joneslanglasalle.co.nz
Philippines
www.joneslanglasalle.com.ph
Singapore
www.joneslanglasalle.com.sg
Sri Lanka
www.joneslanglasalle.com.lk
Taiwan
www.joneslanglasalle.com.tw
Thailand
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Vietnam
www.joneslanglasalle.com.vn
COPYRIGHT @ JONES LANG LASALLE 2013. All rights reserved. The content of this publication has been compiled from the various sources acknowledged. The information is from
sources we deem reliable; however, no representation or warranty is made to the accuracy thereof. This report has been produced solely as a general guide and does not constitute
advice. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties.