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Asia Pacific saw retailer sentiment improve slightly in the second quarter of 2016 but activity diverged across markets and overall leasing demand remained subdued, according to a CBRE report.
Australia led the markets with positive results amid solid demand from new entrants and expansions from overseas.
Meanwhile, CBRE said India remained upbeat, while China turned more positive as the recent wave of store consolidations dissipated, although retailers remained cautious towards new openings.
Retailer sentiment and leasing activity in Tokyo, however, fade dramatically on the back of declining rents and deteriorating economic conditions. Hong Kong and South Korea, on the other hand, remained subdued.
In Singapore, leasing demand also remained subdued, with more retailers closing stores or consider “exiting the market completely,” the report said. With this, more landlords have taken to forward renewals to maintain occupancy levels within their portfolio.
Landlords here are also becoming more flexible in filling prime space while tenants gain an advantage in negotiations, it said.
CBRE noted that the number of short-term leases in Singapore increased in Q2 2016 as more tenants, particularly online retailers, take advantage of vacant space to set up test beds and raise brand awareness among consumers.
Several brands opened flagship stores with frontage along Orchard Road in recent quarters.
However, several tenants within the area have also relocated out of the prime location.
Looking ahead, CBRE expects future supply to be limited “so there will be no additional stress in the coming quarters.” The property consultancy also said that labour shortage and rising operational costs would remain a key challenge for retailers in Singapore.
As such, CBRE advises retailers to boost their presence in core locations, noting that malls located at transport nodes in main areas are still performing well.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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