China and India markets strong in retail real estate

Date : Jan 9, 2015

In terms of retail real estate, China and India will be the markets that see the greatest growth this year, according to Colliers International's "2015 Property Outlook".

But markets such as Indonesia are also benefiting from political stability, and most Asian markets are seeing solid growth in consumer spending.

"The increased spending power of the younger generation, the rapid growth in middle-class families and the sustained pace of urbanisation across the continent have been the driving forces behind retail sales over the past few years," said Simon Lo, executive director of research and advisory services for Asia. "Those are all positive factors and look set to continue for at least another five years."

In China, retail sales are rising by 10-12 per cent a year, one of the fastest rates in Asia, driving strong demand for retail real estate.

"The boom in e-commerce is encouraging international retailers to enter the market," said Helen Mak, senior director for retail services at Colliers Hong Kong. "Topshop set up its online store in China before opening any outlets at all, and Zara has also increased its online presence."

Slowing growth is a challenge for the Chinese economy, but investors with a medium-to-long-term view on growth prospects should view this as an opportunity rather than an impediment, Colliers says.

E-commerce is also emerging as a force in India, with market penetration driven by electronics, apparel and a wide range of fast-moving consumer goods. Besides going online, Indian consumers are also becoming increasingly brand-conscious. That provides an opportunity for both international and domestic retailers to broaden their footprints.

Retailers across the region are set to benefit from growth in tourism. The number of travellers from mainland China is projected to reach 140 million this year. Hong Kong, Singapore and South Korea will continue to be the favourite destinations for those travellers, making up one-third of total outbound traffic.

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