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Singapore boosted by growth in international affluent tourists.
Wednesday, 12th March 2014
Source : CBRE Research

CBRE Research report found that Asia Pacific-based retailers were largely focused on their own region, with all of the top ten destinations in the region.

China is a target for 58 per cent of Asia-based retailers, making it the most sought after market in the region, followed by Vietnam (48 per cent), Malaysia (42 per cent), Indonesia (39 per cent) and Singapore (35 per cent).

"The relatively lower levels of interest by Asia Pacific retailers in expanding in American and European markets reflect a cautious attitude to expanding out of their core markets, but that said we are beginning to see a number of Asia-based brands working on strategies for global markets. For example, Chinese brand Bosideng opening on Oxford Street in London and a number of other Chinese brands looking to launch New York and Australia,” commented Sebastian Skiff, Executive Director of CBRE Retail.

Retailers’ expansion plans in Asia Pacific are relatively modest, with 29 per cent planning to open less than five stores and a further 26% are looking to open between 5-10 stores in 2014.

"Most retailers active within Asia Pacific have tended to focus operations within a few countries, and locations are generally limited to the key or top tier cities where quality retail space is accessible. High rental levels, rising labor costs, decelerating economic growth and slowing retail sales growth in most markets has reduced expansion ambitions for the short term, however, over the longer term we expect economic growth and the rising middle class in Asia to spur further growth,” said Mr Skiff.

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Southeast Asia
The economies of Singapore and Malaysia are strengthening and as a result consumer sentiment is expected to improve in both markets.        

In Singapore, stability in the economy and the employment market has laid a sound foundation for domestic consumption. Retail spending has also been boosted by the growth in international tourists, especially affluent ones, following the opening of major new visitor attractions.

Singapore has since become one of the gateway cities for brands new to Asia. STB has also forecasted visitor arrivals to grow to between 16.3 million and 16.8 million for 2014, and tourism receipts to be in the range of $23.8 billion to $24.6 billion. This is an increase from the visitor arrivals in 2013 and represents a positive outlook for tourist spending.
Fashion retailers Alice & Olivia, a New York-based brand will open their first Southeast Asia boutique at Marina Bay Shoppes in April 2014. Other US brands such as Tom Ford and Proenza Schouler will open their first stand-alone stores at The Shoppes at Marina Bay Sands. The Proenza Schouler store is the brand’s first international outlet outside of the United States and it also plans to open in Bangkok and Hong Kong.  Roger Vivier, a  French luxury shoes and bags retailer, also recently opened its first South-East Asian store last quarter. Japanese optical brand Owndays has also been setting up outlets in both suburban and Orchard Road malls.
Letty Lee, Director, Retail Services, CBRE Singapore said “We are seeing more brands venturing into Singapore and the region; several are launching in Singapore, independent of their principals. This is a testament to their level of confidence in the diverse consumer landscape as a viable test bed for launching their brands in the region.” The economies of Singapore and Malaysia are strengthening and as a result consumer sentiment is expected to improve in both markets.

In Malaysia an influx of new supply is due over the next few years. The resulting lower rental levels should provide an added incentive for international retailers wanting to expand there.

In Vietnam middle class consumers with rising incomes and a hunger for style continue to draw retailers’ interest. Ho Chi Minh City and Hanoi were both ranked in the top 10 cities of most new retailer entrants in 2012 and 2013, according to CBRE’s Retail Hotspots in Asia Pacific report. The liberation of Foreign Direct Investment (FDI) on wholly-owned retail businesses from 2015 is expected to further stimulate this trend.

Retailer appetite has also increased for Indonesia after the recent arrival of major international brands such as UNIQLO and H&M. The Indonesia Shopping Centres Association expects retail sales to grow by 15 per cent in 2014.

Global Trends
While the target market ranking for 2014 is dominated by countries with mature retail sectors, a number of emerging markets in Asia Pacific also feature strongly. China leads the way, which globally is a target for 22 per cent of the surveyed retailers, ranking number five globally, with Vietnam, Singapore and Malaysia also featuring strongly.
Retailers originating from Europe have also shown a strong bias towards their own region with less than 15 per cent of retailers targeting markets outside the region. Americas retailers are biased towards the US, but are also targeting European markets, and in particular Germany.

China ranked as the fifth most popular target destination for retailers worldwide. The importance of China globally cannot be underestimated, in part because of the impact of having a presence there has on sales in other regions.

“China is currently a very exciting place to be as a retailer so it comes as no surprise that China is ranked fifth in retailers’ target markets for 2014. Globally speaking, the Chinese consumer accounts for a significant proportion of many retailers’ sales, whether they are registering those sales through their stores in China or London, New York, Paris or elsewhere. Having a strong presence in China is an important strategy to drive sales across a brand’s global locations, not just within China itself,” said Mr Skiff.

“Consumer sentiment is among the highest in the world and the retail sales market is expected to expand in 2014 on top of the CNY23.4 trillion achieved in 2013. The government has decided to set a target to double household income by 2020; this only adds to the attractiveness of a market that is seeing significant interest from international brands,” Mr Skiff added. “

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