APAC high street retail investment volumes up 8% to USD2.3b in Q1

But the overall retail sector is still in the woods, says JLL.

The retail investment activity in Asia Pacific remained muted, recording USD 5.3 bn in 1Q23 according to JLL, USD 2.2 bn shy of the USD 7.5 bn quarterly average over the last five years. 

“In Q1, large scale shopping mall trades nearly vanished in the region, except Singapore. Shopping mall sentiment stayed soft, faced with a slower leasing market and subpar discretionary spending,” the analyst said in a report.

Here’s more from JLL:

Inflationary concerns and the shift to e-commerce remain another challenge to retailers’ profitability. Some markets are still striving to drive down bloated vacancy. Investors will likely sit out until fundamentals recover. 

On the contrary, high street volumes remain healthy at USD 2.3 bn in Q1, an 8% YoY rise. Investors bullish on high street and shop houses thanks to the tourism revival. Retail assets are less likely to face repricing risk compared to other sectors due to high cash-on-cash yield. 

• South Korea: Investors grow wary of deteriorating hypermarket performance, leading to limited liquidity for the asset class. 

• Australia: Investors on the side lines amid slower shopping mall performance. Regional/global funds are still on the lookout for value add opportunities. 

• Hong Kong: Most deals on high street retail are changing hands among private investors. Some long term capital keen on income resilient/neighbourhood retail assets. 

• Japan: Continued lack of shopping mall trades. Lately, J-reits and developers chased high street and standalone retail assets to access stable income streams. 

• China: Limited liquidity despite reopening momentum. Clearer upward trends in rental growth and occupancy are needed to bring back investor confidence. 

• Singapore: Many mall operators reported upbeat FY2022 performance, demonstrating further YoY improved occupancy as well as 4-8% upside rental revision at renewal.