According to CBRE research, the size of the global retail market totalled $15.6 trillion in 2021, with Asia Pacific accounting for a 40% share. While the pandemic has accelerated the growth of e-commerce, offline retail remains the dominant sales channel.
Asia Pacific will contribute 90% of e-commerce sales growth between 2021-2026, outpacing the rest of the world. Favourable demographics, the adoption of digital wallets, and a vibrant e-commerce ecosystem will continue to underpin rapid e-commerce growth in the region.
CBRE further reports Korea, mainland China, Indonesia and Australia will be among the world's top five most penetrated e-commerce markets by 2026. Emerging Southeast Asia will see the sharpest increase.
While physical stores will remain essential, their role will evolve to become more experience-driven while supporting the fulfilment of online orders.
E-commerce supply chain operations need more warehouse and logistics space. These requirements are typically three times greater than a traditional brick-and-mortar supply chain.
As competition among distributors and retailers for modern high quality logistics pace in Asia Pacific will intensify.
CBRE analysis reveals that for every $1 billion of additional e-commerce sales, an additional 1 million sq. Ft. or 92,903 sq. m. of logistics space is required. This equates to a further 100 to 130 million sq. m. of e-commerce dedicated logistics space required in Asia Pacific between 2021 to 2026.
Impact on Retail Real Estate
Vivek Kaul, Head of Retail, Advisory & Transaction Services, Asia for CBRE says, "As rapid urbanization drives growth in consumer demand, most retailers continue to regard brick-and-mortar stores as their key sales channel. With physical stores viewed as more effective in engaging with consumers and cross selling, retailers are enhancing in-store experiences by adopting technology tools such as digital payments and introducing click-and-collect services to boost sales and provide a seamless experience to the customer."
"Traditional retail is coming back strongly, especially in markets and cities where COVID-19 restrictions have loosened. While global economic headwinds and higher inflation may limit some discretionary spending in the months ahead, people are enjoying being back out in public, socializing, shopping and eating out. Online sales continue to be robust in almost every market, but this is not a new trend and physical retail and e-commerce have learnt to co-exist well for some time", commented Luke Moffat, Head of Advisory & Transaction Services, Asia Pacific for CBRE.
Impact on Industrial & Logistics Real Estate
Moffat further stated, "As e-commerce continues to grow across Asia Pacific, competition among distributors and retailers for modern, high quality logistics space will intensify. Over the next five years, 100-130 million square meters of additional e-commerce-dedicated logistics space will be required. With logistics demand outstripping supply, occupiers should explore build-to-suit developments and invest in the latest warehouse technologies such as AS/RS and AGVs to improve operational efficiency."