Asia is fuelling the growth of the global retail sector, with Chinese cities dominating the region’s fastest-expanding markets, according to JLL’s latest “Destination Retail” report.
The report examines the presence of 240 international retail brands across 140 retail cities and provides insights into international retail expansion. The 140 cities make up 36% of the world’s GDP, 13% of the global population and 33% of total consumer spending.
Among the top 20 growth cities for retail around the world, 12 are in Asia, eight of which are in China. Shanghai is the world’s second-fastest-growing retail destination behind Dubai. The Chinese megacity has become a favourite of international brands looking to test the Chinese market and gain exposure.
Shanghai is the world’s second-fastest-growing retail destination behind Dubai
Beijing is the third-fastest-growing retail market and this is attributed to the swelling middle class and strong concentration of high-net-worth individuals. The Chinese capital’s suburbs are also experiencing rapid growth as people choose to shop locally instead of braving traffic into the city centre.
Rents in these emerging markets reflect market transparency, reputational risk, maturity as well as growth potential. Their rents are relatively low compared with more mature markets.
Based on Oxford Economics forecasts, cities such as Ho Chi Minh City, Jakarta and Bangalore present an opportunity for retailers to establish their brands at rents of less than US$2,000 psm a year, with projected in-store sales increasing 8% to 10% until 2019. However, rents will gradually increase as cities mature and the pace of new construction of retail centres slows.