Hangzhou – July 2019 MARKET IN Retail MINUTES...Centre Living Mall and Jinsha Incity Plaza, were...
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1 savills.com.cn/research • Total retail sales of consumer goods reached RMB138.2 billion in Q1/2019, up by 0.9% year-on-year (YoY). • Three new retail projects, EFC LIVE, Ping An Financial Centre Living Mall and Jinsha Incity Plaza, were launched in 1H/2019. • Compared to the previous two years, Hangzhou’s retail market saw a manageable new supply in the 1H/2019, with the market able to absorb the existing stock. • City-wide vacancy rates fell 0.6 ppts half-on-half (HoH) to 8.7% as newly launched projects achieved high occupancy rates. • City-wide first-floor shopping mall rents increased by 0.8% HoH to an average of RMB18.3 per sq m per day. • Landlords of good quality malls have been flexible about rents in order to secure well-known brands. • Interactive activities are being introduced into shopping malls to enhance the shopping experience for customers. • Seven shopping malls with a total GFA784,600 sq m are expected to be launched in the second half of 2019. • All future supply, except GT Land Plaza, will be located in secondary and tertiary locations with a focus in West City and North City. • The large amount of new supply is expected to bring in more competition, thus pushing up vacancy rates for the whole market. MARKET IN MINUTES Savills Research Retail Hangzhou – July 2019 Solid performance from new projects Hi-tech products such as new energy vehicles are showcased in almost every prime shopping mall. Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research. Anson Chan Director Hangzhou +86571 8102 0222 anson.chan@ savills.com.cn James Macdonald Senior Director China +8621 6391 6688 james.macdonald@ savills.com.cn RESEARCH RETAIL Please contact us for further information Savills team “Shopping malls in Hangzhou are faced with significant competition due to the large supply. Many retailers are utilising and testing new technologies to attract footfall.” JAMES MACDONALD, SAVILLS RESEARCH
Transcript of Hangzhou – July 2019 MARKET IN Retail MINUTES...Centre Living Mall and Jinsha Incity Plaza, were...
1savills.com.cn/research
• Total retail sales of consumer goods reached RMB138.2 billion in Q1/2019, up by 0.9% year-on-year (YoY).
• Three new retail projects, EFC LIVE, Ping An Financial Centre Living Mall and Jinsha Incity Plaza, were launched in 1H/2019.
• Compared to the previous two years, Hangzhou’s retail market saw a manageable new supply in the 1H/2019, with the market able to absorb the existing stock.
• City-wide vacancy rates fell 0.6 ppts half-on-half (HoH) to 8.7% as newly launched projects achieved high occupancy rates.
• City-wide first-floor shopping mall rents increased by 0.8% HoH to an average of RMB18.3 per sq m per day.
• Landlords of good quality malls have been flexible about rents in order to secure well-known brands.
• Interactive activities are being introduced into shopping malls to enhance the shopping experience for customers.
• Seven shopping malls with a total GFA784,600 sq m are expected to be launched in the second half of 2019.
• All future supply, except GT Land Plaza, will be located in secondary and tertiary locations with a focus in West City and North City.
• The large amount of new supply is expected to bring in more competition, thus pushing up vacancy rates for the whole market.
MARKETIN
MINUTES
Savills Research
Retail Hangzhou – July 2019
Solid performance from new projectsHi-tech products such as new energy vehicles are showcased in almost every prime shopping mall.
Savills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
Anson ChanDirectorHangzhou+86571 8102 [email protected]
James MacdonaldSenior DirectorChina+8621 6391 [email protected]
RESEARCH
RETAIL
Please contact us for further information
Savills team
“ Shopping malls in Hangzhou are faced with significant competition due to the large supply. Many retailers are utilising and testing new technologies to attract footfall.” JAMES MACDONALD, SAVILLS RESEARCH
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SUPPLY AND DEMANDThree new retail projects were launched in 1H/2019, adding a total retail GFA of 220,000 sq m.
EFC LIVE, with a total GFA of 40,000 was launched in Q1/2019. Located in the Future Sci-tech City submarket, the shopping mall is part of a mixed-use complex comprising Grade A office and residential apartments. The second phase of the shopping mall is expected to be launched in 2H/2019. The shopping mall is right next to the Chuangjing Road stop on Metro Line 5. Since Future Sci-tech City has a large population of young and tech-savvy people, EFC LIVE introduced several clothing, food and entertainment brands catering to this demographic profile, such as Green&Health, a fresh grocery brand under Lianhua, Shankui Ya (山葵家) and LECYGNE, a beauty salon.
Ping An Financial Centre Living Mall, in Qianjiang New City with a total GFA of 20,000 sq m, launched in April. The small shopping mall has only four floors, with the first and second floors hosting trendy and tech-related retailers, the third floor focusing on specialised food and the fourth floor on high-end catering. Introduced brands include DJI, Yue Long Ying (月龙吟) and Longjing Qihao Garden restaurant (龙井七号花园餐厅).
Jinsha Incity Plaza has a total GFA of 160,000 sq m and is in the Xiasha submarket. After Xixi Incity Plaza and Gudun Incity Plaza, Jinsha Incity Plaza is the third complex developed by SCPG. The shopping mall has attracted many trendy brands including NIKE Beacon 750, Adidas SWC, Muji, Locker Sportspark (洛克体育运动公园) , Bailaohui Cinema (百老汇影院), Coucou（凑凑）and some catered food options for younger consumers.
RENTS AND VACANCY RATESCompared to the previous two years, Hangzhou’s retail market saw a manageable
new supply in the 1H/2019, with the market able to absorb the existing stock. Projects launched at the end of 2018, such as Joy City and Vanke Knowledge Mall, as well as newly released shopping malls such as Jinsha Incity Plaza, all saw strong leasing performance, which contributed to a decrease of 0.6 ppts HoH to 8.7% in the city’s overall vacancy rate.
Qianjiang New City submarket saw an increase in vacancy rate of 2.6 ppts HoH because of the new supply.
In order to bring in footfall and encourage repeat shopping, shopping malls have been making significant efforts to differentiate themselves by introducing interactive activities and creative retailers. In addition, many shopping malls brought in high-tech products (such as new energy vehicles) showrooms to add a high-tech edge to their malls.
Citywide first floor rents increased by 0.8% HoH to RMB18.3 per sq m per day. Landlords of good quality malls have been flexible about rents in order to secure well-known brands. Average rents in prime and non-prime areas stood at RMB25.8 per sq m per day and RMB14.2 per sq m per day, respectively. Binjiang witnessed the most significant HoH rental growth among all submarkets at 2.7% HoH with RMB17.5 per sq m per day. Lakeside and Wulin have the highest average rents at RMB28.1 per sq m per day and RMB26.5 per sq m per day, respectively.
MARKET OUTLOOKThe market is expected to welcome around one million sq m of new supply in 2H/2019, some of which might be delayed. Key projects include GT Land Plaza (高德置地广场) andLongfor Xixi Walkway (龙湖西溪天街). The large amount of new supply is expected to bring in more competition, thus pushing up vacancy rates for the whole market.
Source Savills Research
GRAPH 1: Retail Mall supply, 2014 to 1H/2019
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sq m
GRAPH 2: Retail vacany rates, Q3/2014 to Q2/2019
Source Savills Research
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City-wide Lakeside Qianjiang New CityWest City North City BinjiangWulin Qingchun
GRAPH 3: Retail rental indices, Q3/2014-Q2/2019
Source Savills Research
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City-wide Lakeside Qianjiang New CityWest City North City BinjiangWulin Qingchun
Note the starting date for submarkets’ index are as below: Lakeside-Q1/2011, QJNC-Q1/2011, West City-Q1/2011, North City-Q1/2011, Bingjiang-Q4/2015, Wulin-Q4/2016, Qingchun-Q4/2016
Source Savills Research
Retail
PROJECT NAME PROJECT NAME (CN) GFA (SQ M) AREA
Xixi Haigang City 西溪海港城 68,600 West City
GT Land Plaza 高德置地广场 110,000 QJNC
EFC Phase 2 欧美金融城二期 40,000 Future Sci-tech City
Longfor Xixi Walkway 龙湖西溪天街 150,000 West City
North City Wan Rong Cheng
城北万融城 80,000 North City
Longfor Zijin Walkway 龙湖紫金天街 110,000 West City
TABLE 2: Key Shopping Mall Future Supply, 2H/2019
