Regional Market Analysis
The retail landscape in Southeast Asia is poised for robust growth in 2024, fuelled by a resurgence in the tourism industry. However, retailers face persistent challenges; particularly elevated operational costs influenced by the dynamic global environment. In this context, strategic decision-making becomes paramount to mitigate the risks associated with costly missteps.
Insights from Market Friction Analysis:
- All four markets (Singapore, Malaysia, Vietnam, Thailand) saw an increase in friction, with the highest increase witnessed in Vietnam (40.1% month-on-month) and the smallest increase in Singapore (4.5% month-on-month).
- The improvement in friction observed in Malaysia, Vietnam and Thailand in March was the second consecutive monthly increase, while the Singapore rebound in friction in March came at the back of seven straight months of decline in friction.
- The demand for rental retail properties went up for all four markets. Singapore, Thailand and Vietnam witnessed double-digit growth in demand, while Malaysia saw a more muted increase of 5.8%.
- The supply of listings for rental properties in Malaysia, Singapore and Thailand rose in March 2024, but the supply in Vietnam decreased for the second consecutive month by 23.3%.
Market Friction: A key indicator for informed business decisions.
Market Friction, measured by the demand-to-supply ratio, signifies the gap between demand and supply in the retail property market. Crucial for retailers, mall owners, and investors, it guides decisions on occupancy rates, rental income, growth, and risk. By evaluating the leading indicators from our proprietary indices, businesses can access insights for strategic, sustainable decisions, ensuring long-term competitiveness.
Southeast Asia: Singapore, Malaysia, Thailand and Vietnam
The change in friction could be attributed to shifts in both supply and demand (Figure 2). In March, there was an increase in the supply of retail property rentals in Singapore, Malaysia and Thailand, with Singapore witnessing the highest increase in supply by 10.0%. Vietnam, however, saw a drop in the number of listings as measured by the Supply Index.
All the markets show an increase in demand, with Vietnam witnessing the most significant increase in demand, rising by 19.6% month-on-month. This is followed by Singapore, which saw an improvement in demand by 16.1% month-on-month. Thailand also saw a double-digit growth in demand month-on-month, whereas the demand growth in Malaysia is relatively subdued, increasing by 5.8% month-on-month.
Figure 3 examines individual urban centres across the four markets and demonstrates some interesting trends. Ho Chi Minh City and Hanoi continued to have very high friction, as it remains a landlord market. In contrast, the retail space friction in Malaysia's urban centres seems relatively stable over the past year.
Our Foreign Demand analysis on DataSense (Figure 4) indicates that two out of the four urban centres in Malaysia rank within the top 3 in terms of foreign interest. Searches and views of retail property rental listings as well as outreach to agents and developers outside the home country track this interest. This heightened interest coincides with announcements regarding the progressive completion of the Rapid Transit Link between Singapore and Johor, as well as the potential revival of the High-Speed Rail.
