marketbeat retail snapshot q4 2016 - cushwakeasia.com · retail snapshot q4 2016 marketbeat...

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Retail Snapshot Q4 2016 Beijing MARKETBEAT BEIJING RETAIL Economic Indicators Prime Average Retail Rents Q4 2016 Significant Q4 2016 Store Openings Significant Projects Under Construction www.dtzcushwake.com Economy Local retail sales declined 1.5 percentage points over the first three quarters of 2016 compared to the previous year, posting 4.8% y-o-y growth for a total of RMB775.8 billion in transactions. Online retail sales increased 12% y-o-y to RMB129.9 billion over the same period, beating the national average by 5.1 percentage points. E-commerce accounted for 21% share of total retail sales in Q3, we expect that, it will be higher in Q4 due to the “singles’ day” and “double 12” shopping events. Market Overview New retail supply surged 600,000 sq m in Q4, raising Beijing’s stock to approximately 12.19 million sq m, of which 82% are shopping centers. New shopping center openings included: Fengtai Wanda Plaza, Huaifang Wanda Plaza and Hengtai Plaza in Fengtai District; Green Fun City Phase 2 in Daxing District and Jingtougang•Changyang in Fangshan District. However, the stock of department store continue decreasing in Q4. Ito Yokado Department Store in Shilipu and Parkson Department Store in Taiyanggong all closed in early November. Currently, Ito Yokado in Beijing only left two department stores in Fengtai North Road and Asian Games Village. The two Wanda Plazas added two landmark buildings for Fengtai District, which played an import role in improving the commercial value of this area. In particular, Fengtai Wanda Plaza surrounded by over 3000 enterprise headquarters, and undeveloped lands nearby are all “Land Kings” of Beijing in recent years. Realizing an asset-light business model, the opening of Green Fun City Phase 2 provides a lifestyle center. Jingtougang•Changyang mall located to the south of Changyang Subway Station realized a seamless connection with the subway, which is the first TOD (transit-oriented development) commercial property in Fangshan District developed by Beijing Infrastructure Investment. The local retail market achieved its strongest performance all year in Q4 in terms of sales thanks to a boost from online shopping holidays like singles’ day. Such mega-sales events not only have become a critical driver of online retail in China, but also provide a business opportunity for overseas brands and traditional bricks and mortar stores to leverage. Retailers also are increasingly realizing an online- to-offline (O2O) strategy through selling merchandise on their website for in-store pickup. Outlook The majority of new retail projects added in 2016 were located in the southern part of Beijing outside the 4th Ring Road. Pre-leasing rates at the new shopping centers have all been above 95% with the characteristic of "community service". Ahead, we expect more and more retail projects to become integrated within the community, and to utilize O2O strategies. Q2 16 Q3 16 Past 12-Month Growth GDP Growth 6.7% 6.7% CPI Growth 1.2% 1.2% Retail Sales Growth 3.8% 4.8% RMB/ EURO/ US$/ 12-Month sq m/mo sf/mo sf/mo Outlook Wangfujing 8003,000 10.238.4 10.740.1 Xidan 1,0002,400 12.830.7 13.432.1 CBD 8003,100 10.239.7 10.741.4 Sanlitun 1,5002,500 19.232.0 20.133.4 Zhongguancun 1,3001,800 16.623.1 17.424.1 Exchange Rate: 1 USD = 6.950 CNY = 0.958 EUR as of 23 December 2016 *Average rents (RMB/sq m/mo) are based on ground floor in prime locations in major shopping centers, excluding management, promotional and other fees. Building Location Tenant Area (sq m) Fengtai Wanda Plaza Fengtai Libra KTV 3,500 Beijing SKP CBD GUCCI Flagship Store 1,000 Huaifang Wanda Plaza Fengtai IEV 600 Sanlitun Taikooli Sanlitun Delvaux 377 Source: Beijing Municipal Bureau of Statistics Building Location Area (sq m) Completion Date China World Trade Centre IIIB (Retail) CBD 70,000 Q2 2017 Wangfu Central Wangfujing 40,000 Q3 2017 KWG Mall Chong- wenmen 50,000 Q3 2017 Emperor Group Center CBD 22,000 Q3 2017

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Page 1: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016Beijing

MARKETBEAT

BEIJING RETAIL

Economic Indicators

Prime Average Retail Rents – Q4 2016

Significant Q4 2016 Store Openings

Significant Projects Under Construction

www.dtzcushwake.com

Economy

Local retail sales declined 1.5 percentage points over the first three

quarters of 2016 compared to the previous year, posting 4.8% y-o-y

growth for a total of RMB775.8 billion in transactions. Online retail

sales increased 12% y-o-y to RMB129.9 billion over the same period,

beating the national average by 5.1 percentage points. E-commerce

accounted for 21% share of total retail sales in Q3, we expect that, it

will be higher in Q4 due to the “singles’ day” and “double 12” shopping

events.

Market Overview

New retail supply surged 600,000 sq m in Q4, raising Beijing’s stock to

approximately 12.19 million sq m, of which 82% are shopping centers.

New shopping center openings included: Fengtai Wanda Plaza,

Huaifang Wanda Plaza and Hengtai Plaza in Fengtai District; Green

Fun City Phase 2 in Daxing District and Jingtougang•Changyang in

Fangshan District. However, the stock of department store continue

decreasing in Q4. Ito Yokado Department Store in Shilipu and

Parkson Department Store in Taiyanggong all closed in early

November. Currently, Ito Yokado in Beijing only left two department

stores in Fengtai North Road and Asian Games Village.

The two Wanda Plazas added two landmark buildings for Fengtai

District, which played an import role in improving the commercial value

of this area. In particular, Fengtai Wanda Plaza surrounded by over

3000 enterprise headquarters, and undeveloped lands nearby are all

“Land Kings” of Beijing in recent years. Realizing an asset-light

business model, the opening of Green Fun City Phase 2 provides a

lifestyle center. Jingtougang•Changyang mall located to the south of

Changyang Subway Station realized a seamless connection with the

subway, which is the first TOD (transit-oriented development)

commercial property in Fangshan District developed by Beijing

Infrastructure Investment.

The local retail market achieved its strongest performance all year in

Q4 in terms of sales thanks to a boost from online shopping holidays

like singles’ day. Such mega-sales events not only have become a

critical driver of online retail in China, but also provide a business

opportunity for overseas brands and traditional bricks and mortar

stores to leverage. Retailers also are increasingly realizing an online-

to-offline (O2O) strategy through selling merchandise on their website

for in-store pickup.

Outlook

The majority of new retail projects added in 2016 were located in the

southern part of Beijing outside the 4th Ring Road. Pre-leasing rates

at the new shopping centers have all been above 95% with the

characteristic of "community service". Ahead, we expect more and

more retail projects to become integrated within the community, and to

utilize O2O strategies.

Q2 16 Q3 16Past 12-Month

Growth

GDP Growth 6.7% 6.7%

CPI Growth 1.2% 1.2%

Retail Sales Growth 3.8% 4.8%

RMB/ EURO/ US$/ 12-Month

sq m/mo sf/mo sf/mo Outlook

Wangfujing 800–3,000 10.2–38.4 10.7–40.1

Xidan 1,000–2,400 12.8–30.7 13.4–32.1

CBD 800–3,100 10.2–39.7 10.7–41.4

Sanlitun 1,500–2,500 19.2–32.0 20.1–33.4

Zhongguancun 1,300–1,800 16.6–23.1 17.4–24.1

Exchange Rate: 1 USD = 6.950 CNY = 0.958 EUR as of 23 December 2016

*Average rents (RMB/sq m/mo) are based on ground floor in prime locations in

major shopping centers, excluding management, promotional and other fees.

Building Location Tenant Area (sq m)

Fengtai Wanda Plaza Fengtai Libra KTV 3,500

Beijing SKP CBDGUCCI Flagship

Store1,000

Huaifang Wanda

PlazaFengtai IEV 600

Sanlitun Taikooli Sanlitun Delvaux 377

Source: Beijing Municipal Bureau of Statistics

Building LocationArea

(sq m)

Completion

Date

China World Trade

Centre IIIB (Retail)CBD 70,000 Q2 2017

Wangfu Central Wangfujing 40,000 Q3 2017

KWG MallChong-

wenmen50,000 Q3 2017

Emperor Group

CenterCBD 22,000 Q3 2017

Page 2: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016MARKETBEAT

Beijing

www.dtzcushwake.com

James ShepherdManaging Director

Research, Greater China

Tel: +86 21 2208 0769

[email protected]

Sean Wang Vice President, Greater China,

Managing Director, North China

Tel: +86 10 8519 8168

[email protected]

Sabrina WeiSenior Associate DirectorHead of North China Research

Tel: +86 10 8519 8087

[email protected]

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In

Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman &

Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services,

capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation &

advisory. To learn more, please visit www.cushmanwakefield.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It

is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources

which DTZ/Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and

complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and

DTZ/Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject

to change.

Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield LLP. All rights reserved.

Contacts

Duke ZhenDirector

General Manager of Retail Services, China

Tel: +86 10 8519 8228

[email protected]

Page 3: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016Guangzhou

MARKETBEAT

GUANGZHOU RETAIL

Economic Indicators

Prime Average Retail Rents – Q4 2016

Significant Q4 2016 Store Openings

Significant Projects Under Construction

www.dtzcushwake.com

EconomyGuangzhou’s retail sales increased 8.6% y-o-y to RMB640 billion in

Q3, up 0.2 percentage points q-o-q. Guangzhou continued to lead all

Tier-1 cities in terms of sales growth.

Market OverviewDelivery of AMall in late Q3 and igc in Q4 raised prime retail stock to

1.73 million sq m in the city’s core retail hubs. Outside the core areas,

Hopson Plaza announced its opening in Haizhu District.

A number of properties adjusted their tenant mix and carried out

upgrades to boost sales during the end-of-year peak. Malls especially

sought retailers in the apparel and cosmetics trades, as well as

market entrants and tenants offering new retail formats. For example,

La Perle welcomed Ferragamo, Tesla and luxury duty-free store

Attos. Parc Central introduced Abercrombie & Fitch, Sisley, Jorya as

well as Southern China’s first Dyson concept store and Singaporean

high street brand Pedro. Gucci, D&G, Bottega Veneta and Catier

opened new stores in Tai Koo Hui.

Elsewhere, Happy Valley finished a revamp that now includes a new

gym, additional healthy eating options and more personal care

brands. The igc mall announced its soft opening on October 1 with

approximately a 70% occupancy rate.

Significant changes have taken place in Guangzhou’s retail market

over the past several quarters. Retailers accelerated the pace of O2O

integration, rolled out online payment systems and introduced new

delivery services. Mall operators continued to focus on offering retail

experiences and launched marketing activities to appeal to retailers

and consumers. Meanwhile, the market has matured and become

more diverse. New specialty stores have opened, such as Adidas

Women, Nike Running and Nike Air Jordan. Unique and trendy

brands, designer labels and boutiques have flourished.

Guangzhou’s average retail rents fell 4.9% q-o-q to RMB1,266.6 per

sq m per month in Q4 on new supply and ongoing adjustments in

some existing malls. The overall vacancy rate across the city’s core

retail hubs climbed 6.8 percentage points q-o-q to 14.5% in Q4.

OutlookBricks-and-mortar retailers have responded well to the threat of e-

commerce and amid a sluggish economy. Looking to 2017, we

anticipate an acceleration of retail absorption and overall stable

average rents in core retail hubs of Guangzhou.

Q2 16 Q3 16 Past 12-Month

Growth

GDP Growth 8.0% 8.1%

CPI Growth 2.6% 2.6%

Retail Sales Growth 8.4% 8.6%

RMB* EUR US$ 12-Month

sq m/mo sf/mo sf/mo Outlook

Tianhe Sports Center 1,699.3 21.8 22.7

Zhujiang New Town 556.1 7.1 7.4

Yuexiu 1,000.3 12.8 13.4

Guangzhou 1,266.6 16.2 16.9

Exchange Rate: 1 USD = 6.950 CNY = 0.958 EUR as at 23 December 2016

*Average rents (RMB/sq m/mo) are based on the ground floor in prime locations

in major shopping centers, excluding management fee, promotional fee and other

fees.

Building Location TenantArea

(sq m)

Tai Koo Hui Tianhe Sports Center Gucci 557

Tai Koo Hui Tianhe Sports Center Dolce & Gabbana 300

Parc Central Tianhe Sports Center Palace Cinemas 3,000

igc Zhujiang New Town Apple Store 1,190

igc Zhujiang New Town Palace Cinemas 5,000

Source: Guangzhou Municipal Bureau of Statistics

Building LocationArea

(sq m)

Completion

Date

Way World Tianhe Coach Terminal 100,000 2017

K11 Zhujiang New Town 70,000 2017

Aeon Mall Jinshazhou Baiyun 93,000 2018

Page 4: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016MARKETBEAT

www.cushmanwakefield.com

Guangzhou

James ShepherdManaging Director

Research, Greater China

Tel: +86 21 2208 0769

[email protected]

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In

Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman &

Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services,

capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation &

advisory. To learn more, please visit www.dtzcushwake.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield for use by those with an interest in commercial property solely for information purposes. It is

not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which

DTZ/Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No

warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and DTZ/Cushman &

Wakefield shall not be liable to any reader of this report or any third party in any way whatsoever. DTZ/Cushman & Wakefield shall not be held responsible

for and shall be released and held harmless from any decision made together with any risks associated with such decision in reliance upon any expression of

opinion in the report. Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield All rights reserved.

Contact

Duke ZhenDirector

General Manager of Retail Services, China

Tel: +86 10 8519 8228

[email protected]

Kelvin LiManaging Director, Central China

General Manager,

Guangzhou & ZhengzhouTel: +86 20 8510 8138

[email protected]

Coco LinAssociate Director

Head of Central China Research

Tel: +86 20 8510 8209

[email protected]

Page 5: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016Shanghai

MARKETBEAT

SHANGHAI RETAIL

Economic Indicators

Prime Average Retail Rents – Q4 2016

Significant Q4 2016 Store Openings

Significant Projects Under Construction

www.cushmanwakefield.com

Q2 16 Q3 16

Past 12-

Month

Growth

GDP Growth 6.7% 6.7%

CPI Growth 3.1% 3.2%

Total Retail Sales Growth 7.6% 7.9%

EconomyShanghai’s GDP increased 6.7% y-o-y to reach RMB1.95 trillion

through the first three quarters. Over the same period, the city’s

retail sales picked up 7.9% y-o-y to total RMB802.46 billion.

Market OverviewNew supply included the opening of Bailian Shiji Mall and Infinitus

Hui, raising stock across Shanghai’s five retail hubs to 2.35 million

sq m. Prime retail rents decreased 0.3% q-o-q to average RMB1,909

per sq m per month at the end of Q4. Thanks to high net absorption

at new projects, the occupancy rate held at 94.6% in Q4.

With a prime location at the intersection of four subway lines, Bailian

Shiji Mall is set to be a one-stop shopping center in Pudong. The

launch of Infinitus Hui offers another lifestyle-oriented shopping

center for Shanghai. Meanwhile, renovation work finished at No. 1

Yaohan. The revamped department store now features improved

facilities, more F&B tenants and additional entertainment options.

The flood of new supply to hit the market also included Vanke Mall,

Macrolink Shopping Center, Longfor Paradise Walk and Hall of The

Moon. As developers deepen their footprint in suburban areas, new

retail hubs are emerging. Hongqiao CBD, for example, boasts

around 340,000 sq m of retail stock. Notable retailers have opened

new stores in decentralized areas as well. For example, Apple

expanded to its seventh location in Qibao Vanke Mall, while high-

end supermarket Bravo YH opened in Hongqiao Paradise Walk.

Alibaba’s record-setting “singles’ day” again showed the power of

online retail for driving sales. Bricks-and-mortar stores piggybacked

on the popular shopping holiday by holding their own promotions.

Meanwhile, O2O platforms continued to be rolled out, with traditional

retailers utilizing big data, in-store technology and hotspots to

connect with consumers. Retailers also increasingly have leveraged

online social platforms popular among young Internet users. Uncle

Tongdao, Line Friends and Kumamon Café have opened or said

they plan to open a retail location in Shanghai over the last year.

OutlookThough the market received considerable new supply this year,

pressure from a slowing Chinese economy and fierce competition

have caused delays at a number of retail projects. Decentralization

should be an ongoing trend that will create new shopping districts. At

the same time, Shanghai will continue to attract new entrants, such

as UK clothing retailer Topshop in 2017.

RMB* EURO US$ Q-O-Q 12-Month

sq m/mo sf/mo sf/mo Change Outlook

Nanjing East Rd 1,983 25.39 26.51 0.0%

Nanjing West Rd 2,425 31.05 32.42 -0.9%

Huaihai Middle Rd 1,600 20.49 21.39 0.7%

Xujiahui 2,239 28.67 29.93 0.0%

Lujiazui 1,664 21.31 22.24 0.1%

Note: 1 USD = 6.950 RMB = 0.958 EUR as of 23 December 2016

* Rent equals “First floor asking rent”

Building Location Tenant Area

No. 666 Huaihai

RdHuaihai Middle Rd

Line Friends

Café & Store800 sq m

Rich Gate Huaihai Middle Rd DJI 500 sq m

Kerry Centre

IFC

Nanjing West Rd

LujiazuiLululemon

200 sq m

N/A

N/A Lujiazui Taco Bell N/A

Vanke Mall Other Apple Store 1,200 sq m

Source: Statistics Bureau for Shanghai

Building Location AreaCompletion

Date

HKRI Taikoo Hui Nanjing West Rd 100,000 sq m 2017

Harbour City Lujiazui 138,000 sq m 2017

Century Link Lujiazui 140,000 sq m 2017

Page 6: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016MARKETBEAT

www.cushmanwakefield.com

Shanghai

Keith LawDirector, Retail Services, East China

Tel: +86 21 2208 0225

[email protected]

Shaun BrodieHead of China Strategy Research

Tel: +86 21 2208 0529

[email protected]

Mimie LauManaging Director, East China

Tel: +86 21 2208 0100

[email protected]

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In

Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman &

Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services,

capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation &

advisory. To learn more, please visit www.cushmanwakefield.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It

is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources

which DTZ/Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete.

No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and DTZ/Cushman

& Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change.

Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield LLP. All rights reserved.

Contact

James ShepherdManaging Director, Research, Greater China

Tel: +86 21 2208 0769

[email protected]

Page 7: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016Shenzhen

MARKETBEAT

SHENZHEN RETAIL

Economic Indicators

Prime Average Retail Rents – Q4 2016

Significant Q4 2016 Store Openings

Significant Projects Under Construction

www.dtzcushwake.com

EconomyShenzhen’s retail sales reached RMB397.9 billion in first three quarters,

up 7.8% y-o-y. The city’s CPI cooled 0.2 percentage points q-o-q to 2.4%.

Market OverviewNo new retail supply was added in Q4. Retailers remained conservative in

opening stores, while prospective tenants attempted to gain fit-out costs

and extended rent-free periods from landlords. As leasing negotiations

dragged on, new shopping mall launches were pushed back.

Large-scale restaurants were faced with tremendous operating difficulties

resulting from rising costs and falling demand for corporate banquet

events. However, medium-sized F&B operators and casual diner chains

rapidly expanded, drawing business mainly from professional workers. For

example, Element Fresh opened a new store in Wongtee Plaza and

Heekcaa was accelerating its expansion.

Elsewhere, boutique shopping marts have been becoming increasingly

popular and in some cases replacing big-box supermarkets. For example,

Bravo YH will take over Aeon’s space at Coco Park upon lease expiration.

Other retail trades, such as leisure & recreation and health, have been

flourishing as consumers pay increasing attention to quality of life. Movie

theatres also have a good market prospect. However, fitness centers are

facing fierce competition, with some poorly-operated facilities being

especially vulnerable to closure.

Shenzhen retail rents remained largely stable in Q4, rising 1.2% q-o-q to

average RMB912.61 per sq m per month. Luohu led the way at a 2.1% q-

o-q average increase thanks to the introduction of stronger tenants. In

Bao’an, average rents slid back 3.1% q-o-q due to weaker demand as

newly added projects are in the early stages of materializing. The city’s

vacancy levels edged down to 3.1%, from 3.5% the previous quarter.

OutlookShenzhen is set to receive nearly 1.6 million sq m of new retail supply in

2017. Amid a sluggish economy, there will be downward pressure on

rents.

Shopping malls that can innovate and provide a rich user experience will

dominate the market. Compared with e-commerce, traditional retail

maintains advantages such as an enjoyable shopping environment, quality

service and after-sale guarantees. Unique and innovative building design

is a good way to add value for shopping malls and attract customers.

Q2 16 Q3 16Past 12-Month

Growth

GDP Growth 8.6% 8.7%

CPI Growth 2.6% 2.4%

Retail Sales Growth 8.1% 7.8%

RMB* EURO US$ Q-O-Q 12-Month

sq m/mo sf/mo sf/mo Change Outlook

Luohu 1,616.67 20.70 21.61 2.11%

Futian 906.25 11.61 12.11 1.40%

Nanshan 892.86 11.43 11.94 1.63%

Bao’an 513.33 6.57 6.86 -3.14%

Longgang 550.00 7.04 7.35 0.00%

Exchange Rate: 1 USD = 6.95 CNY = 0.958 EUR as at 23 December 2016

*Average rents (RMB/sq m/mo) are based on ground floor in prime locations in major shopping

centers, excluding management fee, promotional fee and other fees.

Building Location Tenant Area (sq m)

City Plaza Futian Xiaomi Fans Club 260

Central Walk Futian Uniqlo 800

Wongtee Plaza Futian Element Fresh 230

Coco Park Futian Bravo YH 4,000

Source: Statistics Bureau of Shenzhen Municipality

Building LocationArea

(sq m)

Completion

Date

Q City Bao’an 120,000 2018

Shenzhen Unitown Longhua 180,000 2018

All City Nanshan 60,000 2018

MixC Qianhai Nanshan 80,000 2018

Page 8: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016MARKETBEAT

www.cushmanwakefield.com

Shenzhen

James ShepherdManaging Director

Research, Greater China

Tel: +86 21 2208 0769

[email protected]

Cheng Jia-longManaging Director

South & West China

Tel: +86 755 2151 8188

[email protected]

Zhang Xiao-duanDirectorHead of South & West China Research

Tel: +86 755 2151 8116

[email protected]

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In

Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman &

Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services,

capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation &

advisory. To learn more, please visit www.dtzcushwake.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield for use by those with an interest in commercial property solely for information purposes. It is

not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which

DTZ/Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No

warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and DTZ/Cushman &

Wakefield shall not be liable to any reader of this report or any third party in any way whatsoever. DTZ/Cushman & Wakefield shall not be held responsible

for and shall be released and held harmless from any decision made together with any risks associated with such decision in reliance upon any expression of

opinion in the report. Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield All rights reserved.

Contact

Duke ZhenDirector

General Manager of Retail Services, China

Tel: +86 10 8519 8228

[email protected]

Page 9: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016Hong Kong

MARKETBEAT

Economic Indicators

High Street Average Rents – Q4 2016

Vacancy in High Street

Highlight of Q4 2016 Store Openings

www.cushmanwakefield.com

Kevin LamExecutive Director

Head of Business Space, Hong Kong

16/F, Jardine House, Central, Hong Kong

Tel: +852 2507 0507

[email protected]

Catherine BaiManager

Hong Kong Research

16/F, Jardine House, Central, Hong Kong

Tel: +852 2507 0507

[email protected]

James ShepherdManaging Director

Research, Greater China

1366 Nanjing West Road, Shanghai

Tel: +86 21 2208 0769

[email protected]

EconomyThird quarter GDP increased 1.9% y-o-y in Hong Kong. Private

consumption growth also picked up 1.2% y-o-y in Q3, suggesting

stable market sentiment.

Market OverviewAlthough the retail market weathered another down year with weak

leasing demand, the decline in rentals slowed in 2016 compared to

2015 and flattened in Q4. The city’s four major high street shopping

areas saw rents fall approximately 13% on average over the last 12

months compared to as much as a 34% y-o-y drop along prime

streets in Causeway Bay in 2015. The turnaround suggests the

rental correction is near complete.

Decentralized residential areas drew interest from retailers and

investors. Average rents in Tuen Mun, for example, grew 7.1% y-o-y,

indicating strong local demand. Sales and purchases of

decentralized retail properties also were active as investors and end-

users scooped up discounted properties. More than 300 sales

transactions were recorded in 2016, over 90% of which were under

HK$100M.

F&B establishments were a bright spot in 2016. In particular, fast

food shops achieved 6.5% y-o-y growth in restaurant receipts

through the first three quarters. Other types of retailers, especially

those selling luxury and electrical goods, suffered a further decline in

sales of up to 23% y-o-y through the first 10 months of the year.

OutlookDespite the city’s retail slump, Cushman & Wakefield’s recently

released Main Street Across the World 2016 ranked Causeway Bay

the most expensive high street in Asia Pacific and the second most

expensive high street globally.

Ahead to 2017, major high street shopping area rents are expected

to stay at current levels provided that retailer expansion plans

remain limited. Further rental growth in decentralized residential

areas also is forecasted.

Q2 16 Q3 1612-Month

Outlook

GDP Growth 1.7% 1.9%

CPI Growth 2.4% 1.2%

Private Consumption Growth 0.5% 1.2%*

Unemployment Rate 3.4% 3.3%

HKD

/sf/mo

EUR

/sf/mo

US$

/sf/moQ-O-Q

12-Month

Outlook

Causeway Bay $1,799 € 221.9 US$231.7 -1.1%

Tsimshatsui $1,685 € 207.9 US$217.1 -0.5%

Central $1,003 € 123.7 US$129.2 -1.5%

Mongkok $549 € 67.7 US$70.7 -0.9%

Note: US$/HK$ = 7.763; €/HK$ = 8.106 as at 23 December 2016

Q3 16 Q4 16No. of Vacant

Shops Q4 16

Causeway Bay 0.0% 0.0% 0

Tsimshatsui 2.4% 2.4% 2

Central 4.3% 4.3% 3

Mongkok 13.2% 9.4% 5

Source: Census and Statistics Department, y-o-y changes * preliminary figure

Location TradeSize

(Saleable)

Unit

Rental

G/F, Grancastle Commercial

Centre, 2T Sai Yeung Choi Street

South, Mongkok

Cosmetics 1,070 sf HK$710

Shop 3A, G/F, Hanley House, 68-

80 Canton Road, TsimshatsuiCosmetics 781 sf HK$1,088

Shop G08 on G/F, Ginza Plaza,

2A Sai Yeung Choi Street South,

Mongkok

Cosmetics 600 sf HK$833

HONG KONG RETAIL

Page 10: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016MARKETBEAT

www.cushmanwakefield.com

Hong Kong

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000

employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In

Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman &

Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services,

capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation &

advisory. To learn more, please visit www.cushmanwakefield.com or follow us on Weibo/WeChat (DTZ_China).

DisclaimerThis report has been produced by DTZ/Cushman & Wakefield for use by those with an interest in commercial property solely for information purposes. It

is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources

which DTZ/Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete.

No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and

DTZ/Cushman & Wakefield shall not be liable to any reader of this report or any third party in any way whatsoever. DTZ/Cushman & Wakefield shall not

be held responsible for and shall be released and held harmless from any decision made together with any risks associated with such decision in

reliance upon any expression of opinion in the report. Our prior written consent is required before this report can be reproduced in whole or in part.

© 2017 DTZ/Cushman & Wakefield. All rights reserved.

Page 11: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016Taipei

MARKETBEAT

TAIPEI RETAIL

Economic Indicators

Prime Average Retail Rents – Q4 2016

Significant Q4 2016 Store Openings

Significant Projects Under Construction

www.cushmanwakefield.com

EconomyRetail sales increased 1.8% y-o-y to NT$995.2 billion (US$30.96

billion) through the first 10 months of the year. Supermarket sales

led the way by category at a 9.1% y-o-y pickup, followed by retail

warehouses at 5.3% y-o-y growth. Department store sales increased

5.1% y-o-y with the help of mid-year sales promotions.

Market OverviewThe vacancy rate fell across Taipei’s major retail hubs save for a

slight increase in the Taipei Railway Station hub. Available space in

Zhongxiao tightened to 4.1% at the end of Q4 thanks to take-up by

several small storefronts and the flagship opening of The Body Shop

and The Face Shop.

The vacancy rate in the Zhongshan/Nanjing hub edged down to

5.5% in Q4, while on the other hand some boutique stores gradually

withdraw in the luxury goods retail area around Regent Taipei. At the

same time, SOGO Fuxing Store added a Louis Vuitton counter and

expanded the boutique area to three floors.

In Ximen, H&M held the grand opening of its largest Asian flagship

store, which spans five floors and contains approximately 1,500

pings of retail space. Meanwhile, the former China Trust

Headquarter (A7 block) in Xinyi, was demolished. A container food

court has sprung up on the 2,000-ping site, and now features 30

eateries including American, European and Hong Kong restaurants.

Elsewhere, Taipei’s major retail hubs have increasingly welcomed

Korean cosmetics brands, such as Innisfree, Banila Co, Too Cool

For School and Memebox. But challenges face traditional bookstore

operators on Chongqing S. Road due to the popularity of online

retail and e-books.

OutlookRental level in the Zhongxiao hub face downward pressure ahead.

The relatively higher-rent area has been tough on some retailers,

leading to closures, especially of large stores.

There is expected to be a boost in retail at commuting hubs in Taipei

Railway Station as part of a redevelopment of west Taipei.

An underground passage connect Taipei Railway Station and Airport

MRT Station is scheduled to open in early 2017, and is expected to

draw larger commuting crowds into the station.

Q2 16 Q3 16Past 12-Month

Growth

GDP Growth 1.1% 2.0%

CPI Growth 1.3% 0.7%

Vacancy Rental Range Rental Range 12-Month

Rate (NT$/ping/mo) (US$/sq ft/mo) Outlook

Zhongxiao 4.1% 15,000–21,000 13.1–18.4

Taipei Railway

Station5.2% 9,000–13,000 7.9–11.4

Zhongshan/

Nanjing5.5% 8,000–13,000 7.0–11.4

Ximen 1.2% 15,000–20,000 13.1–17.5

Note: Only street front shops are taken into account. All data are based on gross floor area

unless otherwise specified. Rentals are exclusive of management fees and other outgoings. 1

ping = 35.58 sq ft = 3.3 sq m

Note: NT$/US$ 32.147; NT$/ € = 33.57 as at 23 December 2016

Retail Hub Section TenantArea

(ping)

Zhongxiao Sec 4, Zhongxiao E. Rd.T.K.K Fried

Chicken60.4

Zhongxiao Sec 4, Zhongxiao E. Rd. The Face Shop 28.4

Ximen Xining S. Rd. Asics 30.0

Source: Department of Statistics, Ministry of Economic Affairs

Project Name District Opening DateGFA

(ping)

ATT 4 FUNZhongshan Dist.,

Taipei City

Q3 2017-

Sales of General Merchandise

Jan–Oct 2015 Jan–Oct 2016

Sales of General Merchandise

(NT$bn)948.1 995.2

Source: Directorate-General of Budget, Accounting and Statistics

Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered

to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

Page 12: MARKETBEAT Retail Snapshot Q4 2016 - cushwakeasia.com · Retail Snapshot Q4 2016 MARKETBEAT Guangzhou James Shepherd Managing Director Research, Greater China Tel: +86 21 2208 0769

Retail Snapshot Q4 2016MARKETBEAT

www.cushmanwakefield.com

About Cushman & WakefieldCushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way people work, shop, and live. The firm’s

43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the

world. Cushman & Wakefield is among the largest commercial real estate services firms in the world with revenues of $5 billion across core services of

agency leasing, asset services, capital markets, facilities services (branded C&W Services), global occupier services, investment management (branded

DTZ Investors), tenant representation and valuations & advisory. To learn more, visit www.cushmanwakefield.com or follow @Cushwake on Twitter.

Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered

to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

Taipei

James ShepherdManaging Director

Research, Greater China

Tel: +86 21 2208 0769

[email protected]

Billy YenManaging Director

Head of Taiwan

Tel: +886 2 8788 3288

[email protected]

Wendy HsuehDirector

Head of Consulting and Research Taiwan

Tel: +886 2 8788 3288

[email protected]

Contacts

Charlie YangDirector

Head of Valuation & Advisory Services Taiwan

Tel: +886 2 8788 3288

[email protected]