The Retail Index

Third Quarter 2013

We are pleased to launch the Jones Lang LaSalle Asia Pacific Retail Index, which tracks the rental performance of prime retail space across 20
major markets in the Asia Pacific region. This should provide a useful tool in gauging regional leasing market conditions.

Shopping Centres
Retailers continue to seek quality retail space but
availability remains limited
During 3Q13, retail rents for the most expensive locations in shopping
centres remained flat or grew at a slightly slower rate than the second
quarter. Of the 19 featured markets, 11 saw a quarterly increase in
rents for the most expensive locations while for the remainder, rents
were generally flat.
Greater China
Rental growth was moderate in Greater China (+0.83.2% q-o-q),
with Guangzhou seeing the biggest q-o-q rise supported by
selective expansion of domestic mid-tier brands in proven and
established malls. On an annual basis, Beijing was a regional
outperformer with rental growth of 11.9%.

Figure 1: Asia Pacific Shopping Centre Rents, 3Q13

Hong Kong
Sydney
Melbourne
Brisbane
Guangzhou
Shanghai
Singapore
Beijing
Perth
Adelaide
Auckland
Mumbai
Delhi
Kuala Lumpur
Bangalore
Chennai
Bangkok
Jakarta
Manila

Shanghai witnessed modest rental growth of 0.8% q-o-q as

ample supply is exerting downward pressure on rents.
The most expensive locations in Hong Kong are the highest in
the region and more than double the level of Sydney, the second
most costly city. However, the high level of rents has started
to see many retailers less reluctant to chase up rents further,
which has resulted in slower growth and increased attention by
retailers on shopping centres in non-core locations.
Southeast Asia
In Southeast Asian markets, the strongest q-o-q growth was
seen in Kuala Lumpur as it continues to benefit from the entry of
new-to-market brands and a lack of new supply. Jakarta
witnessed the biggest slowdown in rental growth during the
quarter (+2.0% in 3Q13 vs. +4.5% in 2Q13), as competition
intensifies with the addition of new supply in 2013.
India
Flat or modest rental growth was seen in India due to lacklustre
retailer demand. Foreign retailers continue to hold off on expansion
into India because of uncertainty surrounding FDI policies.
Australia

2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000

Net Face Rents (USD psm pa)

Source: Jones Lang LaSalle. See appendix for definition of rents

Rents were generally stable in Australia except for a moderate

decline in Adelaide (3.0% q-o-q). The most expensive locations
in Australia historically fluctuate with trends in CBD employment
and CBD office market rents. Recent contractions in both CBD
employment and office rents have put downward pressure on
retail rents, while new supply has added further pressure in select
markets such as Adelaide. On a y-o-y basis, refurbishments
contributed to rental uplift in Brisbane (+5.1% y-o-y).

Further upswing in rents, albeit moderate

For the remainder of 2013, retailer demand for space is likely to
be similar to recent quarters in most locations, and most markets
are expected to see a further upswing in rents, albeit moderate.

Figure 2: Asia Pacific Retail Rental Index

150

Beijing is expected to continue to be a strong performer due to

healthy demand from retailers.

145
140

Southeast Asian markets are likely to continue to benefit from

strong demand from new-to-market retailers.

4Q03 = 100

135
130
125
120
115
110
105

3Q13

1Q13

3Q12

3Q11

1Q12

1Q11

3Q10

1Q10

3Q09

1Q09

3Q08

1Q08

3Q07

1Q07

3Q06

1Q06

3Q05

1Q05

3Q04

1Q04

100

Source: Jones Lang LaSalle. See appendix for definition of rents

Table 1: Asia Pacific Shopping Centre Rents

Average Rent
3Q13
(USD per sqm per annum)

Quarterly Change
3Q13 vs 2Q13
(Local Currency)

Yearly Change
3Q13 vs 3Q12
(Local Currency)

Central

14,488

0.8%

4.6%

Sydney

CBD

7,180

0.0%

0.0%

Melbourne

CBD

5,737

0.1%

0.1%

Brisbane

CBD

5,493

1.0%

5.1%

Tianhe CBD

4,986

3.2%

7.6%

Shanghai

West Nanjing Road

4,906

0.8%

4.0%

Singapore

Orchard Area/District 9

4,713

2.0%

2.5%

Beijing

Wangfujing Road

3,577

1.9%

11.9%

Perth

CBD

3,171

0.0%

5.0%

Adelaide

CBD

2,798

3.0%

7.8%

Auckland

New Market

1,789

0.0%

1.2%

Mumbai

Prime South

1,393

0.0%

2.5%

Delhi

Prime South

1,347

0.4%

1.1%

Bukit Bintang/KLCC

1,281

2.2%

6.6%

Bangalore

Prime City

946

0.0%

0.1%

Chennai

Prime City

717

0.0%

0.0%

Bangkok

Central Bangkok

687

0.6%

2.7%

Jakarta

CBD

652

2.0%

8.5%

Manila

Makati CBD

465

2.0%

8.2%

Hong Kong

Guangzhou

Kuala Lumpur

Source: Jones Lang LaSalle. See appendix for definition of rents

High Streets
Retailer demand mixed despite subdued retail sales
Hong Kong high street rents are the most expensive in the
region and on average are four times higher than Tokyo, the next
most expensive location. However, costly rents have started to
see many retailers focus their attention on shopping centres in
secondary locations which has resulted in a slower rise of rents
in high streets. Sales growth of jewellery and watches, a major
occupier of high street space, has slowed in recent months but
tourist arrivals remain strong.
Demand continued to strengthen from luxury apparel and F&B
retailers for new openings in Tokyo. Notably, there has been
activity from luxury apparel brands seeking to re-enter the
market. Improved consumer sentiment and rising visitor arrivals
are supporting the retail market.
International retailers continue to seek space in Singapore, with
many using the city as an entry point for expansion into other
Southeast Asian markets. However, a lack of suitable space,
growing suburban shopping centre stock and rising operating
costs are putting greater pressure on Orchard road retailers.
Demand remains relatively healthy in India, but rents have
held steady as retailers have resisted rental increases due to
uncertainty surrounding the domestic and global economies.
In Australia, high street rents face downward pressure from
slower retail spending growth within CBD retail markets and
more subdued leasing demand. In some markets, new shopping
centre additions have created excess capacity and added further
downward pressure on rents.
Rising income levels, a growing urban population and
improvements in business and consumer confidence have
supported demand in Auckland. Nonetheless, retailer margins
remain under pressure.

Figure 3: Asia Pacific High Street Rents, 3Q13

Hong Kong - Russell St

28,839

Tokyo - Ginza

7,340

Shanghai - West Nanjing Rd

5,366

Singapore - Orchard Rd

4,713

Sydney - CBD

3,273

Melbourne - CBD

3,178

Brisbane - CBD

2,973

Auckland - Queen St

2,080

Mumbai - Linking Rd

1,548

Delhi - Connaught Place

1,444

Manila - Bonifacio Global City 415

0

5,000 10,000 6,000 15,000 20,000 25,000 30,000 35,000

Net Face Rents (USD psm pa)

Source: Jones Lang LaSalle. See appendix for definition of rents

Appendix
Shopping Centres
Note 1: Figure 1 & Table 1 rents are average net face rents for prime level locations in
the best prime shopping centres and on a net lettable area basis. Net face rents
are calculated excluding the tenant outgoing costs and landlord incentives are
not taken into account.
Note 2: Figure 2 is a stock-weighted average of average net face rental movements for
prime shopping centres across Asia Pacific.

The most expensive locations in shopping centres can garner rents in excess
of three or four times that of the average mall level. Limited available space due
to strong demand and a lack of new additions in the most expensive & central
locations contribute greatly to the rental gap. A higher level of sales activity and
increased brand exposure are core reasons retailers seek these locations.
psm pa per square metre per annum
High Streets
Note 1: Rents are average net face rents for the high street(s) and on a net lettable area
basis.
Note 2: Rental figures for Australia are for strip shops along these streets: Sydney
Pitt, George & Castlereagh; Melbourne Collins & Bourke; Brisbane Albert &
Edward; and which are not a part of prime shopping centres.
psm pa per square metre per annum
*For Research services in Malaysia, we work with Jones Lang Wootton with offices in
Kuala Lumpur and Johor Bahru.

COPYRIGHT JONES LANG LASALLE December 2013 All rights reserved. No part of this publication may be published without prior written
permission from Jones Lang LaSalle. The information in this publication should be regarded solely as a general guide. Whilst care has been
taken in its preparation no representation is made or responsibility accepted for the accuracy of the whole or any part. We stress that
forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute
certainties. The process of making forward projections involves assumptions regarding numerous variables which are acutely sensitive to
changing conditions, variations in any one of which may significantly affect the outcome, and we draw your attention to this factor.

www.jll.com/asiapacific