Nanjing – April 2021

MARKET IN MINUTES Retail Savills Research

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RESEARCH James Macdonald Senior Director China Nanjing’s retail market remains stable +8621 6391 6688 james.macdonald@ The city saw increasing demand for culture and F&B retailers. savills.com.cn

• From January 2021 to February 2021, the total retail sales of • This year Nanjing will see a significant amount of new supply CENTRAL MANAGEMENT consumer goods was RMB137.4 billion, an increase of 41.1% come to the market, including Wanxiang Plaza, Wuyue Plaza, year-on-year (YoY). IFC Mall and Litchi Plaza, all being handed over in 2021. Jeremy Sun General Manager • There were no new projects launched in Q1/2021, and the total Nanjing citywide retail stock remained at 5.3 million sq m. +8625 5772 0911 jeremy.sun@ savills.com.cn • The average vacancy rate of mid-to-high end projects remained at 4.9%. “The total consumption volume . Savills plc Savills is a leading global real • The first-floor rent of mid-to high-end projects increased by in the first quarter of 2021 estate service provider listed on 0.5% quarter-on-quarter (QoQ) to RMB13.3 per sq m per day. the London Stock Exchange. The company established in 1855, has . increased significantly, which a rich heritage with unrivalled growth. It is a company that leads • The majority of demand in Q1/2021 came from tenants in the rather than follows, and now has stimulated the recovery of the over 600 offices and associates F&B industry. throughout the Americas, Europe, . Asia Pacific, Africa and the Middle retail industry. Meanwhile, East. This report is for general • The first-floor rent in prime areas increased by 0.2% QoQ to informative purposes only. It may not be published, reproduced or RMB23.1 per sq m per day, while the first-floor rent in non- many malls actively upgraded quoted in part or in whole, nor may it be used as a basis for any prime areas increased by 0.6% QoQ to RMB9.9 per sq m per contract, prospectus, agreement day. and expanded their tenant or other document without prior consent. Whilst every effort has . been made to ensure its accuracy, mixes to better appeal to Savills accepts no liability • The vacancy rate in prime areas remained at 4.2%, while the whatsoever for any direct or consequential loss arising from its vacancy rate in non-prime areas remained at 5.0%. consumers.” use. The content is strictly copyright and reproduction of the whole or part of it in any form is JAMES MACDONALD, SAVILLS RESEARCH prohibited without written permission from Savills Research. savills.com.cn/research 1 Retail

ECONOMIC OVERVIEW stood at 3.3%, and the first-floor rent registered GRAPH 1: Shopping Mall Supply, 2016 to Q1/2021 Total consumption in Nanjing experienced at RMB33.9 per sq m per day by the end of a significant recovery in Q1/2021, and from Q1/2021. January 2021 to February 2021, the total retail 600,000 sales of consumer goods was RMB137.4 billion, In the Hunan Road area, Jinmao Place an increase of 41.1% YoY. has changed its name to The Splendors. 500,000 Additionally, the project has significantly SUPPLY AND STOCK changed its tenant mix and added newer There were no new projects launched in tenants to increase traffic to the project. The 400,000 Q1/2021, so the total retail stock in Nanjing vacancy rate of Hunan Road decreased by 0.2 remained at 5.3 million sq m. Most of the of a percentage point (ppt) QoQ to 3.6%. The 300,000

sq m upcoming new projects are located in rent remained the same at RMB10.5 per sq m decentralised areas such as Qixia and Pukou, per day. 200,000 which serves to fill the gaps in the city’s retail market and boost the potential in these areas. Aqua City in the Confucius Temple area improved its tenant mix and added more 100,000 In Q1/2021, most of the tenant demand came fashion and culture retailers to help improve from the service and F&B industries. The first footfall. The vacancy rate in the Confucius 0 Temple area remained stable at 5.3%, while 2016 2017 2018 2019 2020 Q1/2021 store of American fried chicken brand Popeyes opened on the first floor of Central Emporium, the first-floor rent increased by 1.3% QoQ to Source Savills Research and Seesaw Coffee opened their first store RMB21.5 per sq m per day. in IFC Tower in Hexi CBD, which helped energised the city’s “first store economy”. In Xinjiangdong, Longjiang New City Mall Additionally, Happy Tea House, operated Phase 2 started its construction in early March. by Tencent and located at Tiny Westlake, The vacancy rate in this area increased by 0.3 of GRAPH 2: Sub-market Vacancy Rates, Q2/2016 to combined online and offline products, making a percentage point QoQ to 3.3%, while the first- Q1/2021 it unique in Nanjing’s retail market. floor rent stayed at RMB12.5 per sq m per day.

Citywide Xinjiekou Hunan Road Hexi CBD Confucius Temple Xinjiangdong VACANCY RATES AND RENTS The vacancy rate in Hexi CBD remained stable 32% In Q1/2021, the vacancy rate of shopping mall at 6.1%, and the first-floor rent increased by remained at 4.9%, with the prime area and non- 1.4% QoQ to RMB8.5 per sq m per day. 28% prime area vacancy rates remaining at 4.2% and 24% 5.0%, respectively. The first-floor average rent MARKET OUTLOOK increased by 0.5% to RMB13.3 per sq m per day. More projects are expected to launch in 20% In prime areas, the first-floor rent increased by decentralised areas, improving the quality of 16% 0.2% to RMB23.1 per sq m per day, while the Nanjing’s overall retail market. Additionally, new premium projects located in prime areas 12% first-floor rent in non-prime areas increased by 0.6% to RMB9.9 per sq m per day. will help mature the retail market in these 8% central business areas and attract more

4% In Xinjiekou, Deji Plaza Phase 3 will start high-end brands to consider opening stores its construction soon. In the future, there in Nanjing. At the same time, more projects 0% are many high-end projects, such as Deji are expected to change their tenant mixes to Q1 Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 Plaza Phase 3 and JL Central, that will enter including more cultural, experiential and F&B 2016 2017 2018 2019 2020 2021 Xinjiekou, improving the overall retail quality retailers to enhance the competitiveness of their projects. Source Savills Research of the area. The vacancy rate in Xinjiekou

GRAPH 3: Submarket Rental Indices, Q2/2016 to TABLE 1: Selected Leasing Transactions In Q1/2021 Q1/2021

Citywide Xinjiekou Hunan Road Hexi CBD Confucius Temple Xinjiangdong TENANT CATEGORY PROJECT AREA 270

250 Happy Teahouse F&B Tiny Westlake Confucius Temple 230

210 Popeyes F&B Central Emporium Xinjiekou 190

170

150 Seesaw Coffee F&B IFC Hexi Q2/2011=100 130 Source Savills Research 110

90

70 Q1 Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 2016 2017 2018 2019 2020 2021

Source Savills Research

savills.com.cn/research 2