Savills China Retail Chart Book 2012
1 Introduction
The retail market is one the hardest in the real estate sector to analyse; every province and city has slightly different characteristics, every retailer has a different strategy, every consumer a different taste. Developments come in all shapes, sizes and colours, and each retail unit is valued slightly differently to another depending on degree of visibility, or distance from the nearest Metro station or competing retailer. This reports attempts to highlight some of the overriding characteristics and trends but does not presume to delve any deeper into the specifics of individual markets. It is necessary to approach every market as having its own unique opportunities and difficulties.
James Macdonald Head of China Research
2 Macro and Demographic
Domestic demand 4 Chinese consumption vs global 5 Retail sales 6 Incomes and expenditure 7 Expenditure breakdown 8 Gini and Engel 9 Inflation and interest rates 10 Service sector 11 Age pyramids 12 Urbanisation 13 Tourism 14 Market drivers 15 Consumer confidence 16
3 Macro – Potential for growth in domestic demand Domestic savings as a % of total GDP, Consumption as a percentage of GDP, 1960–2009 1970–2009
Euro area Brazil China India Japan Russia UK US World Euro area Brazil China India Japan Russia UK US World 60% 80%
75% 50% 70%
65% 40% 60%
30% 55%
50% 20% 45%
40% 10% 35%
0% 30% 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
China has one of the highest domestic savings rates in the world, higher than both its developed and developing world peers. Despite the government’s efforts to reverse this trend, savings rates have continued to rise in recent years reaching 53% of GDP by 2009. Savings rates are believed to have remained stubbornly high in part because of the nation’s inadequate social security framework. Individuals typically save as much as they can to prepare themselves for large unexpected expenditures, including unemployment, healthcare costs, or some other catastrophe. Despite being the second largest economy in the world, consumption only accounted for 35% of GDP in 2009, having fallen from 47% in 2000, as fixed investment and capital expenditure have taken priority.
Source: IMF, Savills China Research 4 Source: IMF, Savills China Research Macro – Chinese consumption’s global importance
Household consumption index, China’s contribution to global household 1990–2010 consumption, 1970–2009
1990 = 100 Euro World Brazil China India Japan Russia UK US 6% 550
500 5% 450
400 4%
350 3% 300
250 2% 200
150 1% 100
50 0% 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Despite many people talking about high savings rates in China and the lack of consumer mentality, household consumption has increased dramatically over the last 20 years. It has not, however, exceeded GDP growth, which explains why its contribution to the economy has been shrinking. From 1990 to 2010 household consumption grew 4.8 fold (inflation adjusted) from RMB871 billion to RMB14.0 trillion. While accounting for a decreasing amount of global consumption between 1970 and the early 1990s, China’s contribution to global consumption levels has skyrocketed in recent years and now represents more than 5.6% of global household consumption in 2010.
Source: UN, Savills China Research 5 Source: UN, Savills China Research Macro – Retail sales continue to grow at pace Retail sales, Retail sales per capita by tier city, Jan 1994–Dec 2011 2001–2009
RMB billion Retail sales (LHS) YoY growth (RHS) RMB per annum 1 2 3 4 5 1,800 45% 35,000
1,600 40% 30,000
1,400 35% 25,000 1,200 30%
1,000 25% 20,000
800 20% 15,000
600 15% 10,000 400 10%
5,000 200 5%
0 0% 0 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 2001 2002 2003 2004 2005 2006 2007 2008 2009
While China was known as the world’s factory at the start of the new millennia, this perception has quickly changed. China has emerged as the world’s largest auto market, retailers register record sales growth in the country and Chinese tourists swamp luxury goods stores in Paris, London and New York. Retail sales have grown between 10% and 20% since 2004 and during the global financial crisis (GFC), China was one of the fastest growing markets in the world. Retail sales growth has quickly trickled down to smaller cities. Retailers established in key mainland markets have looked to expand footprints in new territories, while businesses looking to save costs have relocated to lower tier cities, generating new jobs and pushing up income levels.
Source: NBS, Savills China Research 6 Source: NBS, Savills China Research Macro – Income and expenditure Disposable income, expenditure and Urban household income distribution, savings rates,1992–2010 2005–2010
12,000 30% 60% 26% 27% 10,000 25% 50% 45% 28% 45% 8,000 20% 40% 42% 6,000 15% 30% 36% 32% 4,000 10% 20% 27% 29% 2,000 5% 22% 10% 16% 11% 8% 6% 0 0% 0% 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 05 06 07 08 09 10
Disposable incomes have risen at a steady, and by western standards phenomenal, rate over the last 20 years. Consumption expenditure, however, has not been able to keep up, resulting in less of the total disposable income being spent. In just six short years the proportion of urban households in China making more than RMB100,000 per annum has increased from 2.1% to 12.2%, while the percentage of households making less than RMB20,000 has fallen from 28.6% to 6.2%. Such figures may be overstated as they do not take into account high inflation rates. Nonetheless, there have been significant gains in bringing about China’s middle class.
Source: NBS, Savills China Research 7 Source: NBS, Savills China Research Macro – Consumer expenditure breakdown Urban consumer expenditure breakdown, Rural consumer expenditure breakdown, 1992–2010 1992–2010 100% 0.8% 100% 1.8% 2.1% 3.2% 2.2% 2.3% 2.1% Miscellaneous 8.4% 7.4% 8.2% 7.1% 5.7% 6.0% 6.7% 15.9% 13.9% 3.5% 3.3% 3.6% 3.7% 90% 15.1% 14.8% 90% 4.7% 3.2% 4.5% Household Facility, 16.0% 17.8% 19.1% 10.2% Article & Service Residence 6.0% 8.0% 11.5% 9.8% 9.9% 9.4% 80% 6.6% 7.8% 80% Miscellaneous 10.0% 11.3% 8.8% 9.4% 1.9% 2.6% 11.1% 9.5% 8.4% 13.3% 3.7% 3.2% Recreation, Edu & 11.5% 14.4% 12.1% 3.8% 2.6% 13.9% 70% Cultural Service 70% 2.5% 5.2% 5.6% 5.2% 4.3% 6.3% 8.8% 3.1% Residence 10.2% 10.5% 5.9% 8.0% 6.9% 5.2% 5.5% Transport, Post & 60% 14.1% 9.3% 11.7% 13.6% 14.7% 60% 6.0% 4.7% 6.2% 6.5% 7.4% Telecommunication 13.5% Recreation, Edu & 4.4% 4.1% 5.7% 4.6% 50% 11.1% 6.5% 7.4% 7.0% 6.5% Cultural Service 50% 5.5% 5.3% 6.0% Medicine & Medical 6.0% Service 10.1% 9.6% Transport, Post & 10.4% 10.7% 40% 40% Telecommunication Household Facility,Article & 30% Medicine & Medical 30% 57.5% 58.6% 52.9% Service 53.4% Service 50.1% 47.7% 47.2% 44.5% 43.1% Clothing 20% 41.1% 20% 38.2% 37.7% 36.3% 35.7% Clothing
10% 10% Food Food
0% 0% 92 95 98 01 04 07 10 92 95 98 01 04 07 10
As incomes have risen and consumption on consumer and luxury products has increased, the percentage of expenditure going to food has decreased rapidly (despite the cultural significance of food and rapid inflation of food stuffs). In urban areas food consumption as a percentage of the total has fallen from 52.9% in 1992 to 35.7% in 2010. Transportation and communication has been the biggest gainer, rising from 2.5% to 14.7% in the same period thanks largely to the growing automobile industry and the explosion in mobile and internet usage.
Source: NBS, Savills China Research 8 Source: NBS, Savills China Research Macro – Gini and Engel Gini coefficient, Grey income estimates, 2000–2009 2008
Sweden RMB NBS data (LHS) Wang's data (LHS) Difference (RHS) Norway 200,000 250% Finland Germany Egypt Mongolia 160,000 200% Canada Switzerland Greece Spain 120,000 150% Italy Indonesia India Vietnam 80,000 100% United States Thailand Russia China (PRC) 40,000 50% Turkey Philippines Argentina Mexico 0 0% Brazil Bottom 10-20% 20-40% 40-60% 60-80% 80-90% Top 10% South Africa 10% 0 10 20 30 40 50 60 70 80 Income inequality and unreported income are two barriers associated with gauging the size of China’s retail market. China’s continues to exhibit a large wealth gap, partially explaining the success of luxury retailers and the relative dearth of mid-end retailers to-date. Critics also question the accuracy of estimates provided by international governing bodies such as the World Bank. A study by Professor Wang of China Reform Foundation in conjunction with Credit Suisse estimated incomes in the top ten percentile to be more than triple those reported, further skewing perceived income distribution.
Source: World Bank, Savills China Research 9 Source: NBS, Credit Suisse, Savills China Research Macro – Inflation, interest rates and bank deposits CPI components, One-year lending and savings rates, Jan 2006–Dec 2011 Jan 2000–Jan 2012
Dec 2005 = 100 CPI Core Service Consumer Goods Food Lending (one-year) Savings (one-year) 170 8
160 7
150 6
140 5
130 4
120 3
110 2
100 1
90 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 00 01 02 03 04 05 06 07 08 09 10 11 12
It is generally perceived that there is a negative correlation between interest rates and consumption levels. Interest rate hikes are designed to cool investment and consumption by encouraging individuals to save more money in the bank, borrow less from the bank and cool the stock market, real estate market and bond prices, resulting in a decline in wealth. While a negative correlation between interest rates and consumption levels is commonly acknowledged, economists such as Michael Pettis have argued that the loss of wealth, rather than higher savings rates, curbs consumption and therefore spending. Following his reasoning, as Chinese savings are typically in the form of bank deposits, interest rate hikes allow for greater perceived wealth, and consequently, an increase not a decrease in consumption.
Source: NBS, Savills China Research 10 Source: NBS, Savills China Research Macro – Service sector % of GDP contributed by sector, Workforce by sector, 1980–2010 1980–2010
Primary Secondary Tertiary Primary Secondary Tertiary 100% 80%
90% 70% 80% 60% 70% 50% 60%
50% 40%
40% 30% 30% 20% 20% 10% 10%
0% 0%
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 10 81 82 83 84 85 01 02 03 04 05 06 07 08 09 80 1980 1985 1990 1995 2000 2005 2010 China’s industrial structure has evolved significantly over the last 30 years. In 1980, the tertiary industry accounted for only 22% of the economy and 13% of the workforce, by 2010 the tertiary industry accounted for 43% of the economy and 35% of the workforce. On average, over the last ten years, 7 million people have been added to the tertiary sector workforce. During the same period there has also been an increase in the urban workforce by 12 million people per year on average.
Source: NBS, Savills China Research 11 Source: NBS, Savills China Research Demographics – Age pyramids Age structure, Age structure, 2010 2050 Male Female Male Female 100+ 100+ 95-99 95-99 90-94 90-94 85-89 85-89 80-84 80-84 75-79 75-79 70-74 70-74 65-69 65-69 60-64 60-64 55-59 55-59 50-54 50-54 45-49 45-49 40-44 40-44 35-39 35-39 30-34 30-34 25-29 25-29 20-24 20-24 15-19 15-19 10-14 10-14 5-9 5-9 0-4 0-4 70 60 50 40 30 20 10 0 10 20 30 40 50 60 70 70 60 50 40 30 20 10 0 10 20 30 40 50 60 70 million persons million persons
China has experienced a significant demographic gain over the past 50 years, with its dependency ratio – the ratio of dependents to those of working age – falling to an all-time low. As the one-child policy limits the working-age population and life expectancy increases, the nation is at risk of ageing rapidly before becoming rich. Fortunately these concerns will be partially offset by continued urbanisation and modernisation of industry. This will translate to a larger urban workforce and greater economic efficiency. By 2050, 25.6% of the population is expected to be aged over 65 years old, up from just 8.2% in 2010.
Source: UNDP, Savills China Research 12 Source: UNDP, Savills China Research Demographics – Urbanisation China’s urbanisation levels, Urban vs rural consumer expenditure 1950–2050E levels, 1980–2011
million people Urban (LHS) Rural (LHS) Urbanistaion rate (RHS) RMB UH RH Ratio 1,600 80% 16,000 400%
1,400 70% 14,000 350%
1,200 60% 12,000 300%
1,000 50% 10,000 250%
800 40% 8,000 200%
600 30% 6,000 150% 400 20% 4,000 100% 200 10% 2,000 50% 0 0%
0 0%
1960 1965 1970 1985 1990 2005 2010 2015 2030 2035 2040 1950 1955 1975 1980 1995 2000 2020 2025 2045 2050
11
81 83 85 87 88 89 90 92 94 96 97 98 99 01 03 05 07 08 10 80 82 84 86 91 93 95 00 02 04 06 09
Higher levels of urbanisation lead not only to greater workforce productivity but also to higher national incomes and greater consumption levels. Urban households in 2011 were estimated to spend on average RMB15,161 per annum compared with just RMB5,221 per annum by rural households. That said, the ratio between urban and rural consumption levels peaked in 2003 and fell rapidly in 2011. This could be a result of a number of factors, including higher remittances and increased food costs boosting farmers’ incomes.
Source: UNDP, Savills China Research 13 Source: NBS, Savills China Research Demographics – Domestic and international tourism Visitor arrivals by nationality, Visitor expenditure by nationality, 1980–2011 1980–2011 Foreigner (LHS) HK, MC & TW (LHS) Domestic (RHS) Domestic Foreigner HK Macau Taiwan million person- RMB billion person-times 1,600 120 times 3.0
1,400
100 2.5 1,200
80 2.0 1,000
800 60 1.5
600 40 1.0 400
20 0.5 200
0 0.0 0 1980 1985 1990 1995 2000 2005 2010 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
The rise of the modern Chinese consumer has been felt both in international luxury retail markets such as Paris, London, Hong Kong and Singapore, and on the domestic market. Domestic travel has increased rapidly in recent years, growing from 750 million person times in 2000 to 2.1 billion person times in 2010. Alongside the rise in the number of tourists, spending by tourists is also increasing. In 2000 the average expenditure was RMB427. By 2010 this had increased to RMB598. While this still lags behind foreign tourist expenditure, the proportional impact is greater given the numbers.
Source: CNTA, Savills China Research 14 Source: CNTA, Savills China Research Retail market drivers
Growing Rising Emerging economy incomes middle class
Consumer Emphasis on Urbanisation demand quality
Status Rising Gifts symbols tourism
15 Macro – Consumer confidence MasterCard consumer confidence survey, NBS consumer confidence survey, Dec 1996–Jun 2011 Jan 2000–Dec 2011
>50 = confidence Asia Pac China Shanghai Beijing Guangzhou >100 = confidence Confidence Satisfaction Expectation 100 120
90 115
80 110
70 105
60 100
50 95
40 90
30 85 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Consumer confidence surveys often provide misleading results and contradict each other. The MasterCard survey is a forward-looking survey with 50 as neutral, covering five variables (employment, economy, income, stock market and quality of life). The NBS survey monitors a similar range of economic variables with 100 being neutral. While the MasterCard survey indicates a relatively rosy picture in China at the moment with consumers much more confident than the rest of Asia, the NBS survey, more frequently monitored, indicates rapidly deteriorating satisfaction and confidence.
Source: MasterCard, Savills China Research 16 Source: NBS, Savills China Research Retailer analysis
Retail formats 18 Department stores 19 Hypermarkets 21 Fashion brands 22 Fast-food 23 Hurun report 24 Brand evolution 26 Market drivers 27 Retail categories 30 Lease terms 32 Handover conditions 33
17 Retailer – Retail formats
Format Characteristics Emergence
High-street State owned or individual landlords; typically low profile although – retail retailers are now making more use of the high visibility
Department Primarily state owned or domestic, although international (Asian) First tier: 1980s (early) store operators are making inroads into the market Second tier: 1980s (early) Part of mixed-use developments, typically of office towers in downtown Retail First tier: 1990s (early) locations but increasingly in residential developments in suburban podium Second tier: 1990s (late) locations Shopping Similar to retail podiums although larger in scale and held by one First tier: 2000s (early) mall landlord; typically fully enclosed Second tier: 2000s (late) Large developments typically connected to the Metro network; typically Community fully enclosed although more F&B- and leisure-focused schemes in First tier: 2000s (late) retail mature city markets with more temperate climates are increasingly open Second tier: 2000s (late) plan A relatively new concept; not as developed as in the US, outlet stores First tier: 2000s (late) Outlet are slowly emerging as car ownership continues to rise and consumers Second tier: 2000s (late) place value and quality on an even footing
18 Retailer – Department stores Main department store operators, Main department store operators, Q4/2011 Q4/2011 Inzone Parkson New world Dashang Group Van's Intime Golden Eagle Wangfujing Store # MOI Bailian PACIFIC 40 13 18 60 35 20 Inzone Parkson 30 21 New world 25 22 47 Dashang Group Van's 20 26 Intime
15 36 Golden Eagle 31 Wangfujing 10 34 MOI Bailian 5 PACIFIC 0
The department store market in China, the primary format for large-scale retail for a number of years in the early 1980s, remains fragmented with no operator dominating the market. Most operators tend to focus on a particular region in China, although with foreign operators now competing on a national level some are increasingly looking for more national coverage. Each region typically has one powerful player with an established long-term presence, attractive locations, strong recognition from customers and satisfactory business performance.
Source: Company websites, Savills China Research 19 Source: Company websites, Savills China Research Retailer – Department stores
Department store No. of Region City level Home city Positioning operator stores
Inzone YRD Second to third tier 60 Jinan Mid-high Parkson National First to second tier 47 Malaysia Mid HK New World National First to second tier 36 Hong Kong Mid-high Dashang Group North Second to third tier 34 Dalian Mid Van's National First to third tier 31 Dalian Mid Intime YRD Second to third tier 26 Hangzhou Mid-high Golden Eagle National First to third tier 22 Nanjing Mid-high Wangfujing National First to second tier 21 Beijing Mid-high MOI National First to third tier 20 Shenzhen Mid Bailian YRD First to second tier 18 Shanghai Mid PACIFIC National First to second tier 13 Taiwan Mid
20 Retailer – Hypermarkets Number of foreign hypermarket stores per city, Q2/2011
Store # Carrefour Wal-mart Tesco Metro Ikea Macalline 60
50
40
30
20
10
0
As food quality and prices become increasingly pressing concerns for China, hypermarkets are emerging as a dominant player in setting market standards. The larger their operations the stronger their bargaining position with suppliers, and hence, the lower the costs. They also have better supply chain management and quality control systems in place to ensure the quality of the products sold. In China’s leading cities hypermarkets, as in many western countries, are positioned in decentralised locations, closer to residential communities and with lower overhead costs. Downtown locations in top-tiered cities are occupied by domestic incumbents and smaller supermarket stores. In lower tier cities, however, hypermarkets such as Carrefour and Jusco are able to anchor centrally located stores where projects are larger, rents are cheaper and landlords want to stimulate footfall.
Source: Company websites, Savills China Research 21 Retailer – Fashion brands Number of stores per brand per city, Q2/2011
Store # Luxury fashion Mid to high fashion Fast fashion 12
10
8
6
4
2
0
For many retailers entering the mainland China market it makes sense to start with Shanghai and Beijing. Both cities have a large population, relatively high average disposable incomes and some of the best developed and managed retail premises. It is no surprise, therefore, that of the retailers surveyed their presence in these two cities was clearly much more significant than in any other city. On average the luxury retailer surveyed had four to five stores in Shanghai and Beijing, mid- to high-end fashion retailers had 10 to 11 and fast fashion had nine to ten stores. Established retailers are now faced with the question of where to go next. Leading luxury brands have already established a presence in most first- and second-tier cities and are continuing to expand aggressively. Mid- to high-end brands favoured Hangzhou and Chengdu the most. Fast- fashion retailers, although late to the China market, are some of the most aggressive out of the three, eager to establish market share before the full force of the emerging middle class is felt in China.
Source: Company websites, Savills China Research 22 Retailer – Fast-food brands Urban population per fast-food store1, Q2/2011 Population per store 160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
A survey of the leading the international fast-food chains in China looks to gauge the market penetration of foreign F&B brands and market size. Combined, KFC, McDonald’s and Pizza Hut had approximately 400 stores in both Shanghai and Beijing by the end of 2011, far more than any other city in China. Store numbers fall to 250 in Shenzhen, 180 in Guangzhou and between 50 and 150 in other second-tier cities, with the exception of Kunming. Fast-food stores have already been widely accepted by Chinese consumers. Operators and are now focusing on maintaining the performance of existing stores in response to increased competition from new entrants and competing F&B formats. Future opportunities for operators primarily lie in lower tier cities and suburban developments in leading cities.
Source: Company websites, Savills China Research 23 Retailer – Hurun, the super wealthy Number of US$ billionaires by nationality, Individuals with more than RMB100 million, March 2011 2010
9,400 313 412 United States China Beijing Russia 26,610 7,300 Shanghai 26 India 30 Germany Guangzhou 32 Turkey 3,810 Shenzhen 36 Hangzhou Hong Kong 38 115 3,160 Wenzhou 52 United Kingdom 2,590 2,130 Other 55 101 Brazil Japan Other
China’s economic miracle has generated great wealth for the upper echelons of society. China now has the second largest number of US$ billionaires in the world after the US, according to the Forbes report. The Hurun report, a Chinese equivalent, puts the figure of “known” US$ billionaires in China at close to 271 and the number of “hidden” US$ billionaires at close to 300 individuals. If the Hurun report is correct this would mean that there are more Chinese US$ billionaires than American.
Source: Forbes, Savills Research China 24 Source: Hurun Report, Savills Research China Retailer – Hurun, best of the best Hurun best of the best awards, 2011 Hurun best of the best star performers, 2011 Overall luxury brand Louis Vuitton Overall brand Hermès Jewellery Cartier Jewellery Piaget Overall watch Patek Philippe Luxury watch Montblanc Fashion label Giorgio Armani Luxury watch IWC Accessory Hermès Sports watch Omega – Speedmaster Skincare Estee Lauder Super luxury car Ferrari 599 Furniture Markor Home Furniture Markor Home Luxury kitchen appliance Miele Luxury kitchen appliance Gaggenau Performance car Jaguar XK International luxury Maldives Luxury yacht brand Azimut destination International private bank UBS Luxury hotel brand The Ritz-Carlton Foreign personal banking HSBC Ladies watch Omega – Ladymatic Domestic private bank China Merchants Bank Overall luxury hotel brand Waldorf Private club in China Chang'An Club Between April and November 2010 the Hurun Report Golf club Mission Hills surveyed 401 mainland Chinese millionaires, each Luxury real estate brand Star River with assets of at least RMB10 million, among them Laptop computer Apple 45 people with assets of at least RMB100 million. For Luxury hotel brand Shangri-La the seventh year running, surveys were carried out Luxury boutique hotel Park Hyatt Shanghai on a one-on-one basis, making this the largest and International luxury destination France most concise survey of its kind in China. Asia luxury destination Japan 25 Retailer – Brand evolution
1990–2000 2000–2005 2005–2011 2012 onwards Mass market and fast- Mid- and high-end Fast-fashion retailers Domestic retailers? food fashion Consolidation of stores?
• 1989 KFC • 2001 Louis Vuitton • 2007 H&M • 1993 Giordano • 2001 Gucci • 2008 M&S • 1994 McDonald's • 2003 Swarovski • 2010 Gap • 1996 Carrefour • 2000 Starbucks
. Foreign fashion brands, particularly low- to mid-end fashion brands from Hong Kong, Taiwan and southeast Asia, started to enter China in the early 1990s . Fast-food chains, such as KFC and McDonald’s, opened their first stores in the first half of the 1990s . Foreign hypermarket chains entered the market in the mid-1990s . Mid- to high-end fashion brands and mid-end F&B, mainly from the US, entered China after 2000 . Retailers which previously only manufactured products in China, started to view China as a market in itself in the mid-2000s . High-street and fast-fashion retailers started to make a decisive push into the China market after 2005. This trend is expected to continue to gain pace in the coming years . Going forward, most categories of retailers are already present in China. The one thing lacking is a strong domestic brand presence which can compete at the same level as the international brands . In the future, an expansion of operations and broadening of product and services selection, as well as the consolidation of smaller stores into larger flagship stores is expected
26 Retailer – Luxury market drivers
• Luxury Brands • Status symbols • Gifts • Emergence of the super-rich class • Early-starter advantages
• Growing saturation in first-tier cities • Difficulty in finding suitable premises/locations in lower tier cities • Lower recognition in low-tier cities • Dilution of brand prestige
27 Retailer – Mid-range market drivers
• Emerging middle class • Urbanisation • Rising incomes • Emphasis on improving quality and lifestyle over purely cost • Improvement in product offerings
• Consumer disparity in different areas • Franchise issues for some early entrants • Lower recognition in low-tier cities
28 Retailer – Fast-fashion market drivers
• Price advantages for a wide range of consumers • Urbanisation • Rising incomes
• Consumer disparity in different areas • Lower recognition in low-tier cities • Difficulty in finding suitable locations in lower tier cities
29 Retailer – F&B categories
Fast-food (150–500 sq m) Kiosk (5–20 sq m) Casual (150–500 sq m) • Saturation in urban areas • Providing juices, desserts, • Sushi, noodles, desserts, of first-tier cities specialty foods… simple western... • Still a popular place for • Some providing seats • Between fast-food and gatherings • Some also opening casual middle dining dining stores ()
Mid-sized (500–800 sq m) Large-sized (>1,000 sq m) • Various types, normally • Fine dining mid- or mid- to high-end • Chinese banquets • Per sitting per capita • Hot pots consumption ~RMB60– • Also some mass-market, 150 targeted and very popular
30 Retailer – Entertainment categories
Cinema (4,000–6,000 sq m) KTV (500–1,000 sq m) Gym (2,000–5,000 sq m) • Fast growing • Popular among the 15–50 • Especially welcomed by • Supported by strong box age group all over the white collars office country • Still not widely utilised • Group activity • Preference to use • Convenience residence clubhouses
Club (1000–2500 sq m) Bookshop (500–800 sq m) Skating rink (~2,000 sq m) • Mostly positioned high, • Struggling with online • Relatively high operation with targeted consumer sellers costs group • Weaker ability to take high • A favourite activity for • Socialising rents young people • Business entertaining
31 Retailer – Lease terms Non-F&B retailers GLA Lease period Rent-free/fit-out Sample tenants (sq m) (years) period (months)
Calvin Klein, Guess, Fashion (specialty) 40–150 2–3 1–2 Nautica Mini-anchor tenants 1,000–3,000 5–10 4–6 I.T. flagship store, Department store >10,000 15–20 6–8 Parkson F&B retailers GLA Lease period Rent-free/fit-out Sample tenants (sq m) (years) period (months)
Fast-food, Japanese Small-sized F&B 150–500 3–5 2–3 restaurants Mid-sized F&B 500–800 6–10 3–4 Chinese fine dining Large-sized F&B > 1,000 8–10 3–4 Local restaurants
32 Retailer – Handover conditions
. Bare-shell/wet-box structure . Central air-conditioning system and exhaust holes . Smoke detector and fire fighting equipment (including sprinklers) . Store window display and glass/shutter door . Phone system, POS system and other appropriate telecommunication systems . Water, electricity and gas conduits (for F&B, beauty businesses)
33 Retail Real Estate
Retail types 35 Open vs enclosed plan 36 Retail development 37 Retail dashboard 38 Prime benchmark 39 Rent index 40 Rents by city 41 Investment 42 Cap value and yields 43 Key trends 44 Key difficulties 47
34 Retail types
Main types
Department store Shopping mall High-street retail (百货商场) (购物中心) (街铺)
Sub-categories
Community shopping Outlet Retail podium centre (奥特莱斯) (商业裙楼) (社区购物中心)
35 Open vs enclosed plan
Enclosed plan • Still the mainstream format for retail projects in most cities • Traditional design • Often sterile environments • Single structures, normally four to ten storeys • Easier environmental control and management • Better tenant visibility
Open plan • Pleasant natural environment • Multiple small low-rise buildings (two to four storeys) • Flexibility of store design/image/display • In keeping with surrounding architecture • Difficulties in management • Open to the elements
36 Retail development
Land acquisition (-4 to 5 years)
-5 •Land use rights
-4 Planning and design (-3 to -4 or 5 years) •Land use permits/planning permits/construction permits -3 Construction (0 to -3 years)
-2 Pre leasing (0 to -2 years)
soft soft opening - -1 Tenant fit-out (-1 to -5 months) although in some cases up to a year
0 Soft and grand opening (0 years)
and post and
- +1 Leasing and management (0 years onwards) •Tenant coordination Tenant repositioning (2 to 3 years) •Marketing and promotion +2 •Proportion of category/level
Years pre Years +3 +4
37 The retail market at a glance…
Shanghai Beijing Guangzhou Shenzhen
Stock million sq m 5.0 4.7 3.0 1.5
Prime occupancy rate % 97 90 90 97 RMB per sq m Rents (prime 5)* 2,000 1,385 2,040 1,750 per month 2011 rental growth % 7.0 10.0 2.0 3.2
Rent cycle – Early upswing Early upswing Late upswing Late upswing
Gross – – – – revisionary yield % 5.0 6.0 6.0 7.0 6.5 7.5 6.5 7.5
2012 supply as a % of 2011 stock % 15.5 31.3 20.0 28.3
* Based on GLA and the top five performing retail centres in the city, excluding management fees 38 Rents – Prime benchmark Average rents (prime 5)*, Cost comparison (prime 5), Q2/2008–Q4/2011 Q4/2011
RMB psm pmth Shanghai Beijing Guangzhou Shenzhen USD psm pmth net 2,500 1,200
2,000 1,000
800 1,500
600 1,000 400
500 200
0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010 2011
The costs of renting, especially the best premises, are still relatively low in the mainland compared with regional levels in mature cities. The average cost (base rent, management fee and tax) of the five best projects in first-tier cities of mainland China is approximately 70% lower than Hong Kong, 40% lower than Singapore and Taiwan, and 20% lower than Tokyo (although Guangzhou is roughly on par with Tokyo). Obviously, premises are only part of the equation for retailers, with taxes (import, VAT, etc), wages, management, and logistics also playing a significant role in gauging the desirability of opening stores.
* Based on GLA and the top five performing retail centres in the city, excluding management fees 39 Source: Savills China Research Rents – Index Property cycle, Rental indices, Q4/2011 Q1/2008–Q4/2011
Hong Kong Tokyo Taipei Q1/2008=100 Beijing Shanghai Hong Kong Tokyo Sydney Singapore Osaka Shanghai 150 Guangzhou Seoul Sydney Shenzhen Ho Chih Ming Hanoi 140 Beijing City Kuala Lumpur 130
120
110
100
90
80
70
Early Late Late upswing Early upswing 60
downswing downswing
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 08 09 10 11
Mainland markets were less affected by the 2008 GFC when compared with other regional centres. This was due primarily to the stimulus package which arrested the economic slowdown and the resilience of the employment market for white collar workers. Rental growth in prime locations has slowed in recent quarters as new supply increases competition between landlords and offers retailers more options.
40 Source: Savills China Research Rents – Area comparison Annual rental growth, Rental ranges of the main retail areas, 2011 2011
RMB psm pmth 4,000 Shanghai Beijing Guangzhou Shanghai Shenzhen Chengdu Hangzhou Tianjin 3,500 Beijing 3,000
Guangzhou 2,500
Shenzhen 2,000
1,500 Chengdu 1,000
Tianjin 500
Hangzhou 0
0% 2% 4% 6% 8% 10% 12%
Positive rental growth was recorded in all markets monitored in 2011, although the extent by which they increased varied significantly. Beijing, the cheapest retail rental market among the first-tier cities, recorded the strongest growth in 2011 despite supply pressure as retailers recorded robust turnover. Leading second-tier cities also recorded notable growth as a result of increasing demand from international retailers looking to expand out of the first-tier cities.
Source: Savills China Research 41 Source: Savills China Research Investment Retail investment by city, Investment by property type, Q1/2008–Q4/2011 Q1/2008– Q4/2011
US$ billion Shanghai Beijing Guangzhou & Shenzhen Other cities US$ billion Apartment Hotel Industrial Office Retail 2.5 7
6 2.0 5
1.5 4
3 1.0
2 0.5 1
0.0 0
Q2 11 Q2 11 Q3 Q1 11 Q1 11 Q4
Q2 08 Q2 08 Q3 08 Q4 09 Q2 09 Q3 10 Q2 10 Q3 Q1 08 Q1 09 Q1 09 Q4 10 Q1 10 Q4
Q1 11 Q1 11 Q3 11 Q4 Q2 11 Q2
Q1 08 Q1 08 Q2 08 Q4 09 Q1 09 Q2 09 Q4 10 Q1 10 Q4 Q3 08 Q3 09 Q3 10 Q2 10 Q3
The retail market has seen growing interest from investors as yields and internal rates of return in traditional stabilised office and residential developments have been compressed over the last two years. Investors looking for add-value, development or lease risk see the retail market as offering significant upside if executed correctly, while more opportunities have been presented as inexperienced domestic developers fail to maximise the potential of existing developments. At the same it is easier to sell the long-term growth story behind the acquisition of a retail development. China’s middle class and undeveloped consumer industry are likely to develop as the government targets an increase in domestic consumption.
Source: RCA, Savills China Research 42 Source: RCA, Savills China Research Capital value and yield/cap rates
. Projects in mature areas are highly sought-after but stock is extremely limited in first- tier cities and leading second-tier cities. . Main investment players include overseas retail funds, global retailers, leading domestic retailers and domestic developers. . Retail en-bloc transactions usually involve a large amount of capital and skilled management experience, keeping away private buyers or small to medium enterprises. . Consensus on yields is hard to come by as most investments involve add-value rather than stabilised projects. . Prior to repositioning: . Entry cap rates (ie, NOI yield): First tier: 3.0%–3.5%; second tier: 3.5%–4.5% . After repositioning: . Stabilised cap rates (after two years): First tier: 4.5%–5.5%; second tier: 5.5%– 6.5%
43 Significant trends
The retail market has always been the most dynamic sector of the real estate industry, reacting to changes in the property market, retailer requirements, as well as consumer and architectural trends. In China this is no different and recent trends include: Project development and management . Shopping malls are now the dominant retail format in first-tier cities; in second- and lower tier cities there is still fierce competition between shopping malls and department stores for dominance . A handful of leading domestic developers are becoming increasingly sophisticated and competing with international developers, working closer with retailers, branding malls, and understanding tenant mixes and consumer opinion and trends . Many projects are still developed by inexperienced domestic developers which are likely to underperform . The China market remains fragmented with local developers typically fashioning little fiefdoms of market dominance . First-tier cities focus on the development of decentralised projects while second-tier cities focus on the development of prime areas and new CBDs . Investment/development companies are acquiring underperforming, centrally located retail assets in first-tier cities to renovate and add value
44 Significant trends (cont.)
Retailers . Retailers, especially high end, are looking to acquire high-street premises for flagship stores, especially in first-tier cities . Store sizes are increasing as retailers consolidate premises and increase product selection . Leisure and entertainment retailers are more important as retail developments’ scale and locations require more diversified tenant mixes to generate footfall . There is increased competition from local retailers, although they are still under- represented by international norms . Competition from online retail sales from leading websites including Yihaodian (一号 店), Taobao (淘宝), 360 Buy (京东网) and Amazon (亚马逊) present concern . Established retailers are buying back franchises, but new entrants are still adopting franchises apart from flagship stores in first-tier cities . Retailers are adopting made in US and Europe products which are highly valued by Chinese consumers . There is an increasing number of international retailers entering the China market
45 Significant trends (cont.)
Consumers . More sophisticated consumers are harder to please, demanding more consumer rights and after sales services . Brand loyalty/recognition is becoming stronger as brands establish a long-term presence and marketing campaigns gain traction . Word-of-mouth still remains one of the most important ways for retailers to reach out to consumers, although the internet is playing a more important role in providing research and pricing expectations . The retail-therapy mentality is emerging in Chinese consumers, especially in first-tier cities, as disposable incomes continue to rise . Made in the US and Europe brands are highly valued . The overseas buying trend is still a significant obstacle for retailers; outbound tourism numbers increase exposure to international retail markets and buying opportunities. At the same time as product selection and quality improves, the gap between product offerings should narrow
46 Key difficulties for developers and retailers
. Knowing the local market – consumer tastes/what brands will work well . Regional differences . Constantly changing . Knowing your place in the local market – unique strengths, differentiation . Access to data . Useful and meaningful data . Reliability of this data Developers . Understanding the legal system and regulatory environment . Rule of law – interpretation of regulations . Corruption . Finding suitable locations . Finding a suitable and reliable joint venture partner Retailers . Containing overheads . Registration . Import tariffs and taxes . Short leases . Building reputations for retailers who are not internationally established
47 City Overview
Beijing 50 Guangzhou 51 Shanghai 52 Shenzhen 53 Chengdu 54 Chongqing 55 Dalian 56 Hangzhou 57 Nanjing 58 Ningbo 59 Qingdao 60 Shenyang 61 Suzhou 62 Tianjin 63 Wuhan 64 Wuxi 65 Xiamen 66 Xi’an 67
48 China tier cities
49 Beijing
Drivers Main industries
. Political centre . Electronics . Headquarter economy . Communications (state-owned enterprises) . Wholesale and retail . Policy support . Finance . Skilled workforce . IT . Largest grouping of high net worth individuals Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . The Mall at Oriental . Wangfujing Metro population million 19.6 11.7% . China World . Xidan Street Area sq km 16,411 – Shopping Mall . Sanlitun GDP RMB billion 1,411.4 10.2% . Beijing APM . Qianmen GDP per capita RMB 75,943 7.1% . Joy City Foreign direct investment US$ billion 8.4 2.1% . Park Life Disposable income RMB 29,073 8.7% Expenditure per capita RMB 19,934 11.4%
50 Guangzhou
Drivers Main industries
. Transport hub . Trade . Business centre of . Logistics south China . Manufacturing . Large population . Processing . Special economic . Software zones
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Teemall . Beijing Road Metro population million 8.06 1.5% . Grandview Plaza . Shangxia Jiu Area sq km 7,434 - . China Plaza pedestrian street GDP RMB billion 1,074.8 13.2% . Laperle GDP per capita RMB 87,458 - . City Sky Galleria Foreign direct investment US$ billion 5.0 31.4% . Taikoo Hui Disposable income RMB 30,659 11.0% Expenditure per capita RMB 25,012 9.6%
51 Shanghai
Drivers Main industries
. Heading up China’s . Financial services largest economic region . China headquarters for . Retail and wholesale multinational corporations . Real estate . Skilled workforce . Large population . Business environment . Consumer market
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Plaza 66 . Nanjing Road (East) Metro population million 23.0 5.0% . Westgate Mall . Huaihai Road Area sq km 6,340 - . Raffles City (Middle) GDP RMB billion 1,716.6 10.3% . CITIC Square . Xujiahui GDP per capita RMB 76,074 - . Grand Gateway Foreign direct investment US$ billion 15.3 15.1% Disposable income RMB 31,838 10.4% Expenditure per capita RMB 23,200 10.5%
52 Shenzhen
Drivers Main industries
. Special economic zone . Telecommunications . Gateway to mainland . Computer China manufacturing . Young workforce . . Migrant city Electronics . Electronics boom . Shenzhen stock exchange
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Shenzhen MixC . Luohu CBD Metro population million 10.4 4.2% . KK Mall . Futian CBD Area sq km 1,992 - . Coco Park . Houhai (Nanshan GDP RMB billion 958.2 12.2% . Yitian Holiday Plaza CBD) GDP per capita RMB 94,296 - . Coastal City . Huaqiangbei Foreign direct investment US$ billion 5.7 58.9% . Overseas Chinese Disposable income RMB 32,381 10.7% Town (OCT) Expenditure per capita RMB 22,807 5.9%
53 Chengdu
Drivers Main industries
. Emerging R&D hub . Electronics . 133 to 500 . IT multinational corporations present . Manufacturing with more coming . Finance . Major transport hub in the western region . Key retail market in western China
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Yanlord Plaza . Chunxi Road Metro population million 11.5 0.8% . Renhe Spring Plaza . Yanshikou Area sq km 12,121 - . Galleria Shopping GDP RMB billion 555.1 15.0% Center GDP per capita RMB 41,253 - . MixC Foreign direct investment US$ billion 5.0 197.9% Disposable income RMB 20,835 18.5% Expenditure per capita RMB 15,511 18.0%
54 Chongqing
Drivers Main industries
. Only municipality in . Automotives, heavy western China and the world’s largest industries municipality by . Chemicals population and area . Consumer goods and . Transportation hub – biggest inland river processed foods port (domestic) . Abundant natural . Major refining centre resources . Vibrant defense sector
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Metropolitan Plaza . Jiefangbei Metro population million 28.8 0.9% . ASE Central Square . Guanyinqiao Area sq km 82,826 - . Paradise Walk . Nanping GDP RMB billion 792.6 17.1% . Times Square . Yanjiaping GDP per capita RMB 27,596 - . Guotai Plaza Foreign direct investment US$ billion 6.3 65.6% Disposable income RMB 17,532 11.3% Expenditure per capita RMB 13,335 9.8%
55 Dalian
Drivers Main industries
. Important business . Electronics/hi-tech process outsourcing . Tourism location . . Largest airport in Major shipbuilding northeastern China hub . Third largest port in . Machinery China manufacturing . Second largest futures . Petrochemicals and exchange in China oil refining
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Tianxing Roosevelt . Renmin Road Metro population million 5.86 0.3% Center . Qingniwa Area sq km 12,574 - . Times Square . Xian Road GDP RMB billion 515.8 15.2% . Peace Plaza GDP per capita RMB 77,704 - . Parkland Foreign direct investment US$ billion 5.3 - . Eton Place Disposable income RMB 21,293 12.0% Expenditure per capita RMB 16,580 8.1%
56 Hangzhou
Drivers Main industries
. Strong retail market . Tourism . Thriving residential . Light industry market, equivalent to . Textiles Shanghai in price . IT . Skilled labour force
. Hot-spot to live, shop and work
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . MixC Hangzhou . Wulin Metro population million 6.9 0.8% . Euro Plaza . Qianjiang New City Area sq km 16,596 - . Mingde Plaza . Hubin GDP RMB billion 594.9 12.0% GDP per capita RMB 86,691 - Foreign direct investment US$ billion 7.7 10.7% Disposable income RMB 30,034 14.8% Expenditure per capita RMB 20,219 12.6%
57 Nanjing
Drivers Main industries
. Transportation hub . Electronics in eastern China . Healthcare . Nation's capital prior . to 1949 – significant Petrochemicals political attention . Iron and steel . National centre for education, research and tourism
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Deji Plaza . Xinjiekou Metro population million 6.3 0.8% . Nanjing Aqua City . Shanxi Road – Area sq km 6,582 - Gulou GDP RMB billion 513.1 13.1% . Guangzhou Road– GDP per capita RMB 65,273 - Zhujiang Road Foreign direct investment US$ billion 4.8 4.8% . Hexi New Town Disposable income RMB 31,838 10.4% . Confucius Temple Expenditure per capita RMB 18,156 14.4%
58 Ningbo
Drivers Main industries
. Flow-over effect from . Electrical products Shanghai’s economy . Textiles . Fourth largest port in . Food China . . Active domestic private Industrial tools economy (small to medium enterprises) . Entrepreneurial spirit
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Tianyi Square . Tianyi Square Metro population million 5.7 5.4% . Heyi Plaza Area sq km 9,817 - . Wanda Plaza GDP RMB billion 516.3 12.4% GDP per capita RMB 90,175 - Foreign direct investment US$ billion 4.1 18.2% Disposable income RMB 30,166 10.8% Expenditure per capita RMB 19,420 10.2%
59 Qingdao
Drivers Main industries
. Fifth largest port in China, . Maritime engineering ninth in the world . Key target for Japanese . Electronics and Korean investors manufacturing (proximity) . Energy production . Variety of mineral deposits . Tourism . Home to local champions: Haier, Tsingtao…
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Hisense Plaza . Hongkong Middle Metro population million 7.64 0.9% . Marina City Road Area sq km 10,978 - . Jusco . Taidong area GDP RMB billion 566.6 12.9% . Zhongshan Road GDP per capita RMB 65,812 - belt Foreign direct investment US$ billion 2.8 52.8% . Shandong Road belt Disposable income RMB 24,998 11.8% Expenditure per capita RMB 17,531 9.0%
60 Shenyang
Drivers Main industries
. Trying to reorient the . Heavy industry, economy towards (aerospace, machine the services and IT tools, automotive, sectors heavy equipment . Many carmakers and and defence) related industries, . Software such as Michelin . Electronics
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Charter Shopping . Golden Corridor Metro population million 7.2 0.4% Centre . Taiyuan Street Area sq km 12,980 - . Palace 66 . Zhongjie Street GDP RMB billion 501.8 14.1% . Joy City . Beihang GDP per capita RMB 62,357 - . MixC City Foreign direct investment US$ billion 8.1 - Disposable income RMB 20,541 11.2% Expenditure per capita RMB 19,961 5.3%
61 Suzhou
Drivers Main industries
. Second largest industrial . Tourism city in the YRD . Suzhou Industrial Park – . Electronics, IT, home to 40 Fortune 500 electrical machinery companies and household . Major foreign direct electrical appliances investment recipient . Preferential policies . Biotechnology and . Links Shanghai to medicine Nanjing
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Suzhou In City . Guanqian Street Metro population million 6.4 0.7% . Suzhou Times . Jinji Lake Area sq km 8,488 - Square . Nanmen GDP RMB billion 922.9 13.3% GDP per capita RMB 93,043 - Foreign direct investment US$ billion 16.9 - Disposable income RMB 29,219 7.5% Expenditure per capita RMB 17,879 4.4%
62 Tianjin
Drivers Main industries
. Pilot reforms in the . Petrochemical financial sector industry, . Central government biotechnology and support medicine . Geothermal energy . Metallurgy . Largest port in north . Automobile China . . Renewable energy Third largest city in equipment China
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Maigo . Nanjing Road Metro population million 13.0 5.8% . Heping Wanda . Xiaobailou Area sq km 11,760 - Plaza . Youyi Road GDP RMB billion 922.4 17.4% . Tianjin Joy City . Binjiang Road GDP per capita RMB 72,994 - . Heping Road Foreign direct investment US$ billion 15.3 10.5% Disposable income RMB 24,293 13.5% Expenditure per capita RMB 16,561 11.9%
63 Wuhan
Drivers Main industries
. Scientific and . Automobile and educational hub of machinery central China manufacturing . Primary investors are . Iron and steel from Japan, France industry and Hong Kong . . Retail consumption Logistics accounted for half of . Tobacco GDP in 2009 . Pharmaceuticals
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Wuhan International . Hangkong Road Metro population million 8.4 0.1% Plaza . Jianghan Road Area sq km 8,494 - . Wuhan Shopping . Zhongnan Road GDP RMB billion 556.6 14.7% Mall . China Optical Valley GDP per capita RMB - - . Chicony Plaza . Xudong Avenue Foreign direct investment US$ billion - -
. Jiedaokou Disposable income RMB 20,806 13.2%
Expenditure per capita RMB 14,490 14.0%
64 Wuxi
Drivers Main industries
. State-level micro- . Machinery and electronic hi-tech metallurgy industrial base . Light equipment . Private enterprises . Electronics . Attempt to develop . Textiles – silk- the largest solar city producing centre in China
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Wuxi Commercial . Zhongshan Road Metro population million 4.7 0.2% Building . CBD Area sq km 4,788 - . Beicheng Tian Jie . Dongan Road GDP RMB billion 579.3 13.2% . Baoli Plaza . Guangyi Road GDP per capita RMB 92,167 - Foreign direct investment US$ billion 4.8 - Disposable income RMB 27,750 10.9% Expenditure per capita RMB 17,003 8.9%
65 Xiamen
Drivers Main industries
. Developing . Tourism environmentally . Electronics friendly industries . Machinery . Strong ties with Taiwan . . Important investment Chemicals capital from Hong . Fishing Kong, Macau and Taiwan
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . SM City Plaza . Zhongshan Road Metro population million 3.5 40% . World Trade Center . Fushan Area sq km 1,573 - GDP RMB billion 206 15.1% GDP per capita RMB - - Foreign direct investment US$ billion 1.6 20.4% Disposable income RMB 29,253 12.0% Expenditure per capita RMB 19,961 11.0%
66 Xi’an
Drivers Main industries
. Xi'an National Civil . Telecommunications Industrial Base . Business process . Telecommunications outsourcing – Huawei, ZTE, . Tourism CATT, NEC, Fujitsu . Aerospace and Siemens . Education . Low-cost, well- . Equipment educated populace manufacturing
Major retail streets / YoY Prime retail malls (2010 data) Units Value areas growth . Century Ginwa . Bell Tower Metro population million 7.8 1.2% department store . Xiaozhai Area sq km 10,108 - . Zhongda . Hi-tech Industrial GDP RMB billion 324.2 14.5% International Development Zone GDP per capita RMB 38,343 - Foreign direct investment US$ billion 1.2 99.4% Disposable income RMB 18,404 -3% Expenditure per capita RMB 14,160 0%
67 Notes page
68 Notes page
69 Notes page
• This document is prepared by Savills for information only. While reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract; interested parties should not rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of the agent or the agent's principal has any authority to make any representations or warranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.
70 Savills China
China Research and Publications James Macdonald Email: [email protected] Tel: (8621) 6391 6688 20/F, Shanghai Central Plaza, 381 Huaihai Middle Road, Luwan District, Shanghai 200020, PRC
China Northern China Southern China Albert Lau Duke Zhen Benny Kwok Head & Managing Director of Savills China Director of Retail Consultancy, Beijing Director of Retail, Southern China Head of Investment and Sales, Savills China Email: [email protected] Email: [email protected] Email: [email protected] Tel: (8610) 5925 2031 Tel: (8620) 3892 7174 Tel: (8621) 6391 6696 Unit 1, 21/F, East Tower, Twin Towers, Unit A, 5/F, Anlian Plaza, 4018 Jintian Road, 20/F, Shanghai Central Plaza, B-12 Jianguomenwai Avenue, Chaoyang, Futian District, 381 Huaihai Middle Road, Luwan District, Beijing 100022, PRC Shenzhen 518026, PRC Shanghai 200020, PRC Northern China Western China Central China Joanna Low Eric Wo Siu Wing Chu Director of Retail Leasing, Beijing Deputy Managing Director of Western China Deputy Managing Director of Savills Shanghai Email: [email protected] Email: [email protected] Head of Retail China Tel: (8610) 5925 2035 Tel: (8628) 8658 7828 Email: [email protected] Unit 1, 21/F, East Tower, Twin Towers, Room 2106 Yanlord Landmark Square No.#1 Tel: (8621) 6391 6689 B-12 Jianguomenwai Avenue, Chaoyang, Section 2, Renmin South Road, Jinjing District, 20/F, Shanghai Central Plaza, Beijing 100022, PRC Chengdu 610016, PRC 381 Huaihai Middle Road, Luwan District, Shanghai 200020, PRC Northern China Southern China Western China Billy Chau Woody Lam Backy Fung Managing Director of Northern China Managing Director of Southern China Head of Agency and Investment, Chengdu Email: [email protected] Email: [email protected] Email: [email protected] Tel: (8610) 5925 2000 Tel: (8620) 3892 7108 Tel: (8628) 8658 7841 Unit 1, 21/F, East Tower, Twin Towers, Room 906, R & F Centre, No. 10 Huaxia Road, Room 2106 Yanlord Landmark Square No.#1 B-12 Jianguomenwai Avenue, Chaoyang, Zhujiang New Town, Section 2, Renmin South Road, Jinjing District, Beijing 100022, PRC Guangzhou 510623, PRC Chengdu 610016, PRC