Real estate investment in Asia will “remain solid” this year, although activity will be limited by asset pricing and availability, according to CBRE’s “2016 APAC Real Estate Market Outlook” report.

The real estate firm predicted that retailers will turn more cautious this year, due to high rents and labor costs. Due to sluggish leasing demand, overall retail rents are expected to show a “minor correction,” and drop less than 1 percent in 2016 in Asia, CBRE said in the report distributed Monday.

“Many retailers will shift their strategic focus from expanding their store networks to rationalization; improving in-store profitability; and upgrading to better locations,” CBRE said. The firm said leasing activity will diverge across markets. Australia, Japan, New Zealand and Southeast Asia are seen doing well while Hong Kong and Singapore will “continue to struggle.” Hong Kong’s retail market has been weak recently. December retail sales slid 8.5 percent.

CBRE [food and beverage] retailers will take the lead in terms of demand, while affordable and niche luxury brands will also be active players. The real estate specialist added that shopping malls will need to continue to adapt their tenant mix in the face of e-commerce competition to accommodation more experience-orientated retailers.

As reported earlier this month, CBRE said demand for prime retail locations in China is seen staying strong, although overall retail rent growth slumped to between 0 percent and 2 percent in 2015, compared with the previous average growth of 5 percent to 7 percent.

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