In Asia, 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. Those are all positive factors and look set to continue for at least another five years. In general, the direction is towards increased consumer spending, and as a result demand for retail real estate looks strong in 2015.

China will be the centre of attention again given its massive population and the incredible pace of growth in retail sales, with gains of 10 to 12% per year. This has been a challenging time for China, with the pace of economic growth slowing. But the central government has been very supportive of e-commerce and has introduced several measures to speed its development. That should mean Chinese retail sales can move forwards despite the headwinds. That in turn will attract more local and overseas retailers to establish a footprint. Topshop is a case in point, a major international retailer that set up its online store in China before opening any physical outlets at all. Zara, the Spanish retail chain, has physical stores but has launched its online store on Tmall.com to expand its presence in China. 

In India, e-commerce is also emerging in a big way, with market penetration driven by electronics, apparel and a wide range of fast-moving consumer goods. The middle class is getting more brand-conscious, creating more opportunities for international retailers. However, less than 10% of India’s retail real estate meets international standards. So we see huge growth potential for the retail real-estate sector across the country, particularly after the recent elections brought in a very pro-business government.  

Asia-wide, retailers will be encouraged by the rising number of visitors from mainland China, projected to reach 140 million in 2015. Hong Kong, Korea and Singapore will continue to be the most-favoured destinations for mainland visitors, making up one-third of total outbound visitors. Japan is set to start catching up primarily because of the recent depreciation of the Japanese yen.

For most mature markets in Asia, the lack of new supply will remain a key challenge for most retailers. Opportunities in decentralized sub-markets are going to be the most-appealing options for mid-tier brands that want to establish a foothold at reasonable rents. Meanwhile, investors will see neighbourhood malls as key targets in 2015, and will also look at repositioning and converting existing retail properties.