The total value of real estate deals involving retail property hit a record level in the third quarter in Asia, surpassing the value of office transactions in the region for the first time.

The shift is a sign that commercial property investors are targeting retail in greater numbers, and also that the retail property market is maturing from a fragmented state.

Retail transactions hit $9.9 billion for the quarter to the end of September, a startling 56% increase over the previous three months, according to figures from brokerage DTZ.

Office-space transactions still advanced at a healthy 20%, amounting to $8.2 billion. Total commercial property investment transactions – deals involving retail, office and industrial space – hit $29.6 billion, up 8%.

David Green-Morgan, the head of Asia-Pacific research at DTZ, says the shift highlights the increasing importance of the retail sector as an asset class in Asia.

“Speaking to our clients, retail is very high on their agenda,” he says. “Retail is holding its own as an investment class, particularly for real estate investment trusts (Reits) and institutions around the region.”

The retail property segment has withstood the impact of the financial crisis better than the office and industrial arenas, with stimulus packages in Asia having spurred consumer spending. Emerging middle classes in developing Asia also make the segment attractive.

“Now that the economic recovery is well under way across the region, investors are taking the opportunity to bolster their retail portfolio,” Green-Morgan adds.

Almost 80% of the retail property transactions in the third quarter occurred in three markets: China, Japan and Malaysia. China and Japan are typically the largest two markets for commercial transactions, but activity in Malaysia, the bulk of it in Kuala Lumpur, shows how the advent of Western-style shopping centres in a market that had few of them beforehand is attracting investment.

DTZ tracks deals over $5 million and extrapolates the total from what it says is a sample of around 75% of the transactions. Its figures include both corporate investment and purchases by individuals, provided they’re big enough.

There wasn’t one single huge deal in the third quarter that pushed the retail segment ahead of the office. The biggest retail deal, the $1.4 billion sale of the Seibu Ikebukuro department store in Tokyo from YK Asset Ikesei to Seven & i Asset Management, was the second-biggest transaction of the quarter, but more than matched by an office deal.

The largest deal in the region was the $1.45 billion sale of the Australian office portfolio of fund manager Brookfield Asset Management, sold to its affiliate Brookfield Properties, which is focusing on acting as a commercial landlord.

The other major retail transaction of note was the $739 million sale of the Sunway Pyramid Shopping Mall in Malaysia to the Sunway Reit, from the developer Sunway Pyramid.

Nicole Wong, regional head of property research at brokerage CLSA Asia-Pacific, believes deals such as the Malaysian transaction demonstrate how retail property is maturing in Asia.

Previously, there wasn’t that much high-end retail space being constructed in Asia. “Now there’s more of the retail asset class available and for sale, and the developers have got a bit more mature and are venturing into this asset class,” says Wong.

Investors in China may also start to shift their focus towards retail property, Wong adds, since the government continues to clamp down on residential property.

The emergence of Reits in many Asian markets has also begun to provide an exit strategy for property developers that build large shopping malls. That’s a different strategy from the previous approach in Asia, when developers built smaller shopping centres and typically sold them off in strata title to individual buyers.

Strata title is a common real estate term that refers to divvying up a development and selling it off bit by bit, so for a strata title office building, each office would be sold off separately.

Building office space is far simpler than constructing retail space, property analysts say. Where office space is more of a commodity, retail space is a “smoke and mirrors” game of location, tenant mix and brand-name appeal. Effectively it’s harder to build and harder to manage.

It remains to be seen if the activity in the retail property segment can regularly surpass the transaction value in office space. But the shift over the last quarter could be a sign of things to come.

“It highlights the underpinnings of this sector. There are legs to it,” says Sigrid Zialcita, the managing director of Asia-Pacific research at Cushman & Wakefield.

Asia is, after all, no longer simply a target for manufacturing investment and a producer of exports. The increasing self-sufficiency of many Asian economies will not have escaped institutional property investors.

“This year, the numbers are really compelling that the strength of consumer spending is really there,” Zialcita says. “People have jobs and people have improving incomes. The interest is there simply because the expectation is that consumer spending will be a primary driver of the economy.”