Most Asia Pacific Retailers Expect Increased Sales and Plan for Store Expansion in 2023: CBRE Survey

Asia Pacific – January 19, 2023 – The Asia Pacific retail sector is on track for a full recovery in 2023, with most retailers in the region expecting increased sales, while planning to open new stores this year, according to the latest research from CBRE.

The survey finds that 72% of the retailers expect their sales to rise from 2022, while 71% intend to open new stores despite rising costs, with expansion driven by domestic retailers. As the pandemic eases, retailers believe that the ‘return to the office’ will benefit CBD retail and some online sales will shift back to brick-and-mortar retail. Nearly half of the respondents expect physical store footfall to return to pre-pandemic levels.

Although inflation in Asia Pacific is forecasted to ease in 2023, 87% of retailers cite the increase in production and labour costs as their top challenge for the year, followed by labour shortages (67%) and the rising cost of running an online business (66%).

Most retailers prefer stores in prime locations, such as shopping malls in city centres and prime high street locations. Interest in secondary high streets also increased in this year’s survey (37% in 2023 vs 23% in 2021) due to their lower rents compared to prime locations.

Mainland Chinese tier 1 cities, Hong Kong SAR, and Singapore ranked as the top three preferred destinations for cross-border retail expansion in 2023.

“We expect retail foot traffic to improve further now that mainland China has lifted its zero-covid strategy,” added Vivek Kaul, CBRE’s Head of Retail, Advisory & Transaction Services, Asia for CBRE. “While retailers remain cautious towards extending their overseas footprint, the return of mainland Chinese tourists will surely give a strong boost to the ongoing recovery in Southeast Asia, Japan and the Pacific, which should bolster leasing activity in the coming months.”

“We expect most retailers to adopt a cautious approach in their expansion this year. Nearly 60% expect to increase their footprint in existing markets, with only one-third planning to enter a new destination,” said Ada Choi, Head of Occupier Research, Asia Pacific for CBRE. “While the current retail leasing market still favours tenants, retailers have to speed up their decision making. With market sentiment improving, we suggest retailers secure space in strategic locations and established markets that are on track for recovery.”

ENDS

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