FEATURES
years, according to data from the Economist Intelligence Unit. Corresponding unemployment rates should fall below
the historical averages experienced since the mid-1990s. Emerging markets such as Indonesia, and to a lesser extent Vietnam, are expected to improve significantly in their respective unemployment rates.
Wealth Accumulation As depicted in Chart 3-2, disposable incomes per
capita are projected to grow in all five major markets in Southeast Asia from 2012 to 2016. Major gains in these rates are expected in Indonesia and Malaysia, while Singapore and Thailand will maintain steady growth. Only Vietnam is expected to see a noticeable deceleration of its pace of annual growth.
Tourism and Retail Competitiveness A recent study of cross-border shopping patterns in
the Asia-Pacific measured the competitiveness of the Southeast Asian markets.3 Singapore ranked high in the Asia-Pacific
region on factors such as transportation
infrastructure, accessibility and the diversity of the shopping experience but it fell short on affordability. Other cities such as Jakarta and Ho Chi Minh City were deemed affordable, but lagged in areas where Singapore ranked high. Kuala Lumpur ranked the highest. The cities with the highest overall scores in Southeast Asia (Kuala Lumpur, Singapore, and Bangkok) were considered best prepared to compete for external tourism spending. The implication for the other cities was that broad improvements in overall amenities—things such as airports, transit systems and public spaces—could enhance the value of local retail markets.
Real Estate Fundamentals Supply As demonstrated in Chart 3-3, with the exception of
prime retail space in Singapore, the pipeline throughout the rest of Southeast Asia ranges from adequate to abundant, depending on the market. Despite the large new supply expected in Singapore’s suburban areas, demand is expected to be robust, and vacancy rates already reflect full occupancy. The retail market in suburban Kuala Lumpur faces a similar situation, i.e., ample supply but with relatively low vacancy. Pre-
commitment ratios are above 70% for planned retail construction in the suburbs of both cities.4 In the major cities of Vietnam, significant supply risks
loom ahead. Both Ho Chi Minh City and Hanoi have more than one million square feet (sf) in the supply pipeline in the coming four years.5 It is difficult to tell if or how much pent-up demand may exist in these markets. Vietnamese cities differ from the rest of the region because they are at such an early stage of retail investment. A surge of new supply is not uncommon when retail markets are moving up the maturity continuum. For now, Vietnamese retail vacancy rates remain far above the rest of the region.
Demand Retail rents in Malaysia, Bangkok and Jakarta share
solid prospects for growth in the near term. Over the past few years, rental performance in these markets has remained relatively sheltered from external disturbances in the Eurozone or elsewhere, as seen in Chart 3-4. Major new tourist destinations in Singapore—Marina
Bay Sands, Universal Studios and Resorts World Sentosa—helped to re-establish the market’s retail sales growth in the wake of the global financial crisis. Recent new construction and expansion boosted Singapore’s retail stock and widened merchants’ options. In the process, the new supply also muted the market’s recent rental growth. Despite Singapore’s weaker economic outlook, its retail sales growth is expected to keep pace with past trends. Despite an upbeat outlook on the demand side, supply
will likely be so excessive that it will disrupt retail fundamentals in Vietnam and send rents down in the near term.
Pricing Retail assets in Singapore and Kuala Lumpur are
currently trading at the lower end of their respective historical yield bands. The historical yield bands for these markets are rather narrow, reflecting their relative maturity and stability. In contrast, Bangkok and Jakarta, still maturing, have experienced a much wider range in yields. As a result, investors in these two cities demand higher risk-adjusted returns. The outlook for unadjusted total returns on retail
assets from 2013 to 2016 varies market by market, based largely on the progression of maturity in each
3 Economist Intelligence Unit and Global Blue, The Globe Shopper Index Asia-Pacific, April 2012. 4 Jones Lang LaSalle REIS, as of Q3 2012. 5 CBRE Research, as of Q2 2012.
INTERNATIONAL COUNCIL OF SHOPPING CENTERS 14 3 RETAIL PROPERTY INSIGHTS VOL. 20, NO. 1, 2013
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45