^{Note: Cities covered in each sub-region include 25 Chinese Tier 2 cities,
5 Tier 1 cities in Greater China, 6 in India, and 6 in Southeast Asia.
Source: JLL Research, as at 1Q21}

Nonetheless, similar to the office market, rental growth and investment returns, especially for retail assets in China's Tier 2 cities, remained relatively muted, despite the above-average growth in leasing demand. As for office spaces, the fast-growing supply of new shopping mall stock during the 10-year period contributed to elevated vacancy rates and depressed rent growth levels. Local governments' eagerness to attract companies to come to their cities resulted in favourable pro-business policies in the form of tax incentives for such companies. On the other hand, developers looking to capitalise in such a pro-business environment rapidly built new retail stock to capture the strong influx of demand.

^{Note: Cities covered in each sub-region include 25 Chinese Tier 2 cities,}
5 Tier 1 cities in Greater China, 6 in India, and 6 in Southeast Asia.
Each data point represents the vacancy rate and the year-on-year growth
in total retail stock of one city for one year.
Source: JLL Research, as at 1Q21

As elsewhere in the world, the COVID-19 pandemic has inflicted tremendous damage to retail real estate while helping accelerate long-term trends that were already underway before the pandemic -- particularly the adoption of e-commerce. While China was already ahead of the rest of the world in online and mobile shopping, no doubt COVID helped drive its adoption even further. As consumer behaviour, technology and the retail sector continue to evolve, developers and investors in traditional brick-and-mortar retail will need to continue adapting to an ever-changing operating environment to survive, thrive and compete against both online and offline players. It may be in the form of increased omnichannel retailing, providing more experiential retail, or something else innovative. Those that succeed in doing this have the most to gain from an increasingly wealthy Asia.