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