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Savills Research

Retail Beijing – July 2021

Beijing sees three new retail projectsThe retail market rebounded, with footfall picking up in shopping malls.

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“With the steady recovery of the domestic economy and consumption brought by the Labour Day holiday, Beijing’s retail market rebounded. Additionally, three new shopping malls entered the market with near-full occupancy in Q2/2021, giving further evidence to a market recovery.” VINCENT LI, SAVILLS RESEARCH

James MacdonaldSenior DirectorChina+8621 6391 6688james.macdonald@savills.com.cn

Vincent LiAssociate DirectorNorth China+8610 5925 2044vincentx.li@savills.com.cn

Anthony McQuadeManaging DirectorNorth China+8610 5925 2002anthony.mcquade@savills.com.cn

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CENTRAL MANAGEMENT

Savills teamPlease contact us for further information

• Retail sales increased 23.3% year-on-year (YoY) to RMB584.1 billion in the first five months of 2021, while general retail and F&B sales rose by 20.5% YoY and 69.2% YoY to RMB538.7 billion and RMB45.3 billion, respectively.

• Three new projects were launched in Q2/2021, bringing 186,107 sq m of retail space to the market. Lize Paradise Walk, located in Lize, contributed 92,107 sq m of retail space. Tongzhou Aegean Place, located in Tongzhou, brought 83,000 sq m to the market. The New, located in Xidan, brought in 11,000 sq m. By the end of Q2/2021, the total stock of the citywide shopping malls reached 10.21 million sq m.

• Citywide shopping mall vacancy rate reached 6.9%, up 0.1 of a percentage point (ppt) quarter-on-quarter (QoQ) but down 2.8 ppts YoY.

• Citywide shopping mall first-floor rents reached RMB849.9 per sq m per month in Q2/2021, and the rental index increased by 1.8% QoQ and 2.0% YoY.

• Average prime first-floor rents hit RMB1,287.6 per sq m per month by the end of Q2/2021, and the rental index rose by 2.6% QoQ and 2.5% YoY.

• Average non-prime first-floor rents registered RMB687.3 per sq m per month by the end of Q2/2021, and the rental index declined by 0.2% QoQ and 0.6% YoY.

RETAIL

Lesley WangDirectorNorth China+8610 5925 2086lesley.wang@savills.com.cn

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Source Savills Research

GRAPH 1: Shopping Mall Annual Supply, 2016 to 1H/2021

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GRAPH 2: Vacancy Rates In Each Submarket, Q3/2016 to Q2/2021

Source Savills Research

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GRAPH 3: Rental Indices In Each Submarket, Q3/2016 to Q2/2021

Source Savills Research Source Savills Research

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Citywide Xidan WFJCBD Sanlitun LufthansaEast 2nd Ring Road ZGC

NEW SUPPLY Beijing’s retail market continued its steady recovery with the total retail sales increased 23.3% YoY to RMB584.1billion in the first five months of 2021, while general retail and F&B sales rose by 20.5% YoY and 69.2% YoY to RMB538.7 billion and RMB45.3 billion, respectively.

In Q2/2021, three new projects were launched, bringing 186,107 sq m of retail space to the market. Lize Paradise Walk, located in Lize, contributed 92,107 sq m of retail space, which is currently the only quality shopping mall in the area. Tongzhou Aegean Place, located in Tongzhou, brought 83,000 sq m to the market. This project was originally a retail podium of the Grand Canal Centre. It was later acquired and upgraded by Being Investment Group and then operated by Aegean Group. The New, in the core area of the Xidan submarket, brought in 11,000 sq m retail space to the prime submarket. This project was upgraded by China Resources Land and is operated by China Resources MixC Lifestyle. At the end of Q2/2021, the total stock of the citywide shopping malls reached 10.21 million sq m.

In addition, the Beijing Modern Plaza Dingcheng shopping centre in Shijingshan was closed for renovation in Q2/2021. As one of the pilots under the “One Policy for One Retail Store” policy, this project will be upgraded and is expected to reopen in Q4/2021 in order to capture business opportunities brought by the 2022 Beijing Winter Olympics.

RENTS AND VACANCY RATESStimulated by the Labour Day and Dragon Boat Festival holidays, footfall at shopping malls increased significantly in Q2/2021. Additionally, Beijing’s 2021 consumption season was officially launched in April. Major shopping malls actively rolled out sales promotions to boost consumption and prompt the Beijing retail market’s recovery.

In Q2/2021, the citywide shopping mall vacancy rate reached 6.9%, up 0.1 of a ppt QoQ but down 2.8 ppts YoY. The vacancy rate of prime submarkets dropped by 1.8 ppts to 3.7% thanks to landlords actively attracting new brands to fill in vacant stores and effectively adjusting their brand portfolio. The average vacancy rates in non-prime submarkets rose by 1.1 ppts to 6.8%.

Citywide shopping mall first-floor rents reached RMB849.9 per sq m per month in Q2/2021, and the rental index increased by 1.8% QoQ and 2.0% YoY. Average prime first-floor rents hit RMB1,287.6 per sq m per month by the end of Q2/2021, and the rental index rose by 2.6% QoQ and 2.5% YoY. Average non-prime first-floor rents registered RMB687.3 per sq m per month by the end of Q2/2021, and the rental index declined by 0.2% QoQ and 0.6% YoY.

MARKET OUTLOOKMultiple departments in Beijing’s municipal government held conferences in Q2/2021 to discuss how Beijing could be developed as an international consumption centre. The campaign involved major 10 actions, including promoting digital consumption and building new consumption landmarks. These new commercial landmarks will incorporate each of their areas’ unique cultures and outstanding features.

In addition, the highly-anticipated Universal Beijing Resort will open in 2H/2021. The Universal Studios in Beijing is the first world-class theme park in Beijing and the world’s largest Universal Studios. Universal Beijing Resort is expected to attract huge footfall and boost consumption significantly in the future, benefiting the related sectors, including tourism, hotel, retail, and F&B. In 2H/2021, driven by multiple favourable factors, Beijing’s retail market is expected to see more consumption hotspots in the city and the consumption enthusiasm will continue to rise.

Note Calculation of rental indices starts from Q1/2008 for all submarkets except for Sanlitun

and Lufthansa starting from Q3/2008

Retail

TABLE 1: Selected Future Projects, 2H/2021

PROJECT LOCATION DEVELOPER RETAIL TYPE RETAIL GFA (SQ M)

Joy Breeze Fengtai Fengtai Grand Joy Holdings Shopping Mall 50,000

Taikoo LiSanlitun West

ExpansionSanlitun Swire Properties Shopping Mall 30,000