Wednesday 7 January 2015

Colliers International: China and India to lead retail growth as e-commerce booms

n terms of retail real estate, China and India will be the markets that see the greatest growth in 2015, according to Colliers International's 2015 Property Outlook. But markets such as Indonesia are also benefitting from political stability, and most Asian markets are seeing solid growth in consumption.

"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," Simon Lo, Executive Director of Research and Advisory Services, Asia, said. "Those are all positive factors and look set to continue for at least another five years."

In China, retail sales are rising at 10 to 12% per year, one of the fastest rates in Asia, driving strong demand for retail real estate.

"The boom in e-commerce is encouraging international retailers to enter the market," Helen Mak, Senior Director, Retail Services of Colliers Hong Kong, said. "Topshop set up its online store in China before opening any outlets at all, and Zara has also increased its online presence."

Slowing growth is a challenge for the Chinese economy, but investors with a medium- to long-term view on growth prospects should view this as an opportunity rather than an impediment.

E-commerce is also emerging as a force in India, with market penetration driven by electronics, apparel and a wide range of fast-moving consumer goods. Besides going online, Indian consumers are also becoming increasingly brand-conscious. That provides an opportunity for both international and domestic retailers to broaden their footprints.

Retailers across the region are set to benefit from growth in tourism. The number of visitors from mainland China is projected to reach 140 million in 2015. Hong Kong, Singapore and South Korea will continue to be the favourite destinations for those travellers, making up one-third of total outbound traffic.
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