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Asia Pacific Retail Market Booms Due to Rise of Middle Class

A report on “The New Age of the Asia Pacific Retail Market” revealed that in recent years, the Asia Pacific retail market has boomed on the back of strong economic growth, rapid urbanization and the emergence of a large and prosperous middle class population. Asia Pacific is now experiencing an uproar of retail construction to accommodate the influx of international retailers to the region.

The report reveals that Asia’s middle class is expected to go from 525 million in 2009 to over 1.7 billion by 2020, nearly tripling in size. It is further estimated that by 2020, China, India and Indonesia will hold places in the top 10 global markets for retail consumption demand.

International retailers, primarily fast fashion brands, are continuing to enter and expand in Asia Pacific in order to take advantage of the growing middle class.

The ultimate retailer demand in Asia Pacific is expected to remain subdued entering 2015, but activity and demand levels are set to deviate through different markets.

Jonathan Hsu, director at CBRE Research for Asia Pacific, said, “Japan and Australia are expected to remain upbeat, whilst activity in India should pick up on the back of relaxation of foreign direct investment in single and multi-brand retail. China, Hong Kong and Singapore will stay relatively quiet due to softening domestic consumption, in addition to Chinese shoppers’ weaker appetite for luxury goods.”

In regard to retailer types, CBRE predicts mass market brands will focus on highly populated markets, mainly in China and India, for expansion in the coming year.

Retailers in the luxury sector will elect to focus on the mature markets of Japan, Singapore and Hong Kong, with China less of a priority due to the ongoing anti-corruption campaign.

Bridge brands will concentrate on slightly more mature markets, some of which include Japan and South Korea.

Sebastian Skiff, executive director of retail services at CBRE, said, “Retailers will have to implement higher standards of due diligence, competitor benchmarking and strategic planning as the retailing environment turns increasingly competitive. Retailers are also putting a general focus on portfolio reviews and consolidation, although they’re continuing to display a strong interest for well-established properties and locations in markets with a proven track record.”