Mid-year review
Instead of opening multiple stores, retailers are focusing on relocating or upgrading existing stores to prime locations as such areas provide more visibility and opportunities to channel sales to either physical or online platforms.
Forecast made in January 2026
Locate stores in prime areas
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The Middle East conflict is exerting only a mild impact on retailers’ real estate planning, with most groups continuing to assess leasing plans. Retail leasing sentiment remained resilient in H1 2026, with strong demand for prime space seen across the region.
Alert: In contrast to prime areas' resilience, non-core locations in Hong Kong SAR and Singapore are struggling amid weaker demand. Rising operating costs and rents in these two cities are making it challenging for retailers, especially those in the F&B segment, to maintain profit margins.
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Availability remained scarce in prime core locations in H1 2026. Except for mainland China, upcoming supply in most markets is limited, ensuring rents continue to grow at a mild pace. Rents in Tokyo Ginza, India core markets, and Vietnam's CBDs have reached historical highs. Low vacancy in these markets has led to retailers considering non-core areas with unique positioning, resulting in higher rent growth.
Surprise: Despite the addition of a large volume of new retail supply in mainland China, occupancy in prime shopping centres has been less affected. Shanghai's prime retail districts will be the first areas to see rents stabilise.
Mid-year review
Limited availability in prime locations will intensify competition for space, while high rents and landlords’ strong negotiation power will influence retailers’ decision making. Retailers must move fast when opportunities arise or pre-commit to upcoming projects to secure their desired space.
Forecast made in January 2026
Act quickly and decisively
Forecast Accuracy
Landlords continue to introduce new-to-market brands to refresh their tenant mix and increase footfall to their malls. Many are introducing mainland Chinese F&B and Korean fashion brands, which retain a strong appetite for regional expansion. Other key sources of new tenancies include local online retail brands and e-commerce platforms, which are establishing physical stores to gain exposure.
Surprise: Many new-to-market brands are turning more accommodative toward landlords' higher asking rents in prime areas. This is because their overseas expansion plans hinge upon setting up stores in established locations to maximise brand marketing and exposure.
Mid-year review
Consumer spending patterns have shifted since the pandemic, leading to a stronger emphasis on experiences over physical goods. Landlords are advised to rethink their offering by expanding allocations to dining and outdoor space; refreshing their tenant mix; and incorporating entertainment areas. These initiatives can enhance engagement; encourage longer dwell time; and ultimately increase overall spending.
Forecast made in January 2026
Reshuffle tenant mix to stay relevant
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Luxury brands have turned more cautious toward expansion due to a global slowdown in sales. Some are shuttering underperforming stores and shifting focus to a more experiential offering. This gap is being filled by solid demand from fashion and athleisure flagship store expansion.
Alert: Online retail sales are outpacing offline retail, raising e-commerce penetration across the region. Retailers are still keen to expand their brick-and-mortar stores but with a greater focus on an experiential offering as they look to introduce their brand and direct sales to their online platforms.
Mid-year review
Retail trades that focus on physical goods, such as fashion, sports, and luxury, continue to integrate experiential elements into their retail spaces. This has led such retailers to prioritise flagship stores as platforms to showcase product features and brand heritage. In addition, some luxury brands have introduced F&B to stores within their portfolios to enhance customer experience and strengthen brand visibility.
Forecast made in January 2026
Augment experiential offerings
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