Asia’s place in the international retail scene is already well established but we have recently seen a growing focus on ASEAN markets with their favourable demographics, emerging middle class and extensive new infrastructure aligned with a swift post-COVID resurgence in trade and tourism.
Fair winds to swell the ASEAN luxury retail sector
The COVID-19 pandemic has generated significant operational and revenue challenges over the past two years, but the luxury industry has shown remarkable resilience in Asia Pacific. According to Bain & Company, Asia is now the biggest luxury marketplace globally, surpassing Europe and the Americas in 2019. This dominance strengthened further in 2021, with personal luxury goods sales in Asia rising to €112 billion, accounting for about 39% of all global sales.
Overall, the luxury retail markets within the Asia Pacific region are divided into those where domestic activity has supported sales and driven recovery and those which have suffered badly due to the lack of tourism and travel. Local consumption should continue to support leasing demand, lending resilience to the region’s mature markets, such as the tier-1 cities of mainland China, Tokyo and Seoul. Meanwhile, many destinations in Southeast Asia have been hit hard by the absence of high-spending international tourists, with rents correcting by 2.6% (Kuala Lumpur) to nearly 43.7% (Jakarta) between 2019 and 2021. Viet Nam had outperformed its regional peers as the country swiftly controlled local outbreaks, with prime retail rent increasing by 11.1% in Ha Noi.