Over the next five years, the Asia Pacific region will account for 90% of global e-commerce growth.

In 2021, the global retail market will be worth $15.6 trillion, with Asia Pacific accounting for 40% of that total. Although the pandemic has accelerated e-commerce growth, offline retail is still the most important sales channel.

Between 2021 and 2026, Asia Pacific will grow e-commerce sales at a rate of 90%, outpacing the rest of the world. Rapid e-commerce growth in the area will be supported by favorable demographics, the use of digital wallets, and a thriving e-commerce ecosystem.

CBRE continues to state By 2026, the top five e-commerce markets in the world by market penetration will include Korea, mainland China, Indonesia, and Australia. The biggest increase will be in emerging Southeast Asia.

Physical stores will still be necessary, but their function will change to focus more on the customer’s experience while assisting in the fulfillment of online orders.

More warehouse and logistics space is necessary for e-commerce supply chain operations. Typically, these requirements are three times higher than those of a conventional brick-and-mortar supply chain.

As retailers and distributors vie for modern, high-quality logistics, Asia Pacific will see an increase in competition.

According to a CBRE analysis, every $1 billion in additional e-commerce sales necessitates the need for an additional 1 million square feet, or 92,903 square meters, of logistics space. This means that additional e-commerce-specific logistics space of 100 to 130 million square meters will be needed in Asia Pacific between 2021 and 2026.

Repercussions for retail real estate

According to Vivek Kaul, Director of Retail, Advisory, and Transaction Services for CBRE in Asia, “Most retailers still view brick-and-mortar stores as their primary sales channel in spite of the fact that rapid urbanization is driving growth in consumer demand. Retailers are enhancing in-store experiences by adopting technology tools like digital payments and introducing click-and-collect services to boost sales and give the customer a seamless experience because physical stores are seen as more effective in engaging with customers and cross-selling.”

“Particularly in markets and cities where COVID-19 restrictions have been loosened, traditional retail is making a strong comeback. People are enjoying being back out in public, mingling with others, shopping, and dining out, despite the fact that rising inflation and global economic headwinds may limit some discretionary spending in the months to come. Although this is not a new trend and physical retail and e-commerce have learned to coexist successfully for some time, online sales are still strong in almost every market “Luke Moffat, Head of Advisory & Transaction Services, Asia Pacific for CBRE, made the following statement.

Real Estate Affected by Industrial & Logistics

Moffat went on to say, “Distributors and retailers will compete more fiercely for modern, high-quality logistics space as e-commerce expands throughout the Asia Pacific. 100-130 million square meters more of e-commerce-specific logistics space will be needed over the next five years. In order to increase operational efficiency, occupiers should investigate build-to-suit developments and make investments in the newest warehouse technologies, such as AS/RS and AGVs.”