No matter how you look at the data Asia dominates the luxury retail sector. Asia cities are the most appealing destinations for luxury retailers to set up shop, says a new report from real estate consultant JLL. The Destination Retail 2016 report reveals that the region boasts seven of the top 10 cities with the highest presence of luxury retailers.
The research, which for the first time provides a global ranking of cities by their appeal to cross-border retailers, reveals that Hong Kong is second only to London in popularity. Also among the top 10 are Tokyo, Shanghai, Singapore, Beijing, Osaka, and Taipei.
“Hong Kong remains Asia’s leading luxury shopping destination with many retailers using it as a springboard for expansion into Mainland China,” says James Assersohn, Director of Retail for Asia Pacific, JLL. “While there has been a noticeable slowdown in luxury sales in the city due to China’s slowing economy and the government’s anti-corruption crackdown, Hong Kong continues to attract many high-spending Chinese tourists.”
“More broadly, the dominance of Asian cities in the index highlights the attractiveness of the region to retailers, thanks to its burgeoning middle classes and growing levels of affluence,” explains Assersohn.
Tokyo, which takes fourth place globally, has seen a revival in luxury retailer’s demand for high quality real estate as a result of an improving economic climate and rising tourism numbers.
The yen, which has devalued by nearly 30 percent since 2012, has made Japan a magnet for retail tourism across the region. International visitors to Japan rose 47 percent in 2015 over the previous year with the largest contingent being from Mainland China. A weaker yen is also encouraging Japanese citizens to make the most of their luxury purchasing power at home.
Shanghai, meanwhile, at number six in the ranking, is catching up fast on Hong Kong to become one of Asia’s leading luxury retail destinations and still remains Mainland China’s premier shopping destination.
“Thanks to a diverse economy and wealthy consumer base, Shanghai has become a favourite place for international brands to test the Chinese market and gain brand exposure, sometimes bypassing Hong Kong in the process,” says Assersohn.
“Retailers are drawn to the dynamism of Shanghai due to its trend-setting nature, while Beijing is more favoured for its high sales potential thanks to the strong base of high-net-worth individuals in the Chinese capital,” says Steven McCord, Head of Retail Research, Asia, JLL. “Each retail market is distinct in its own way, but together, the two mega-cities lead as the top shopping destinations in the country, and this attracts millions of consumers from both near and far.”
Overall performance of the luxury sector in Asia, meanwhile, will depend not only on economic growth. Factors such as the volume of travel and rising number of affluent households will also be important, concludes Assersohn.
“Strong forecast growth of high-income households in Asian cities over the next 15 years, in particular, should help to keep Asia at the forefront of luxury spending growth, both domestically and abroad,” says Assersohn.
Top 10 Global Cross Border Luxury Retailer Attractiveness Index 2016
2 Hong Kong
5 New York