Asian Cities Report Taiwan Retail 1H 2015
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Savills World Research1H 2015 Taiwan Asian Cities Report Taiwan Retail 1H 2015 savills.com.hk/research savills.com.hk/research 01 Asian Cities Report | Taiwan Retail GRAPH 1 Retail sales F&B Retail sales growth rate by sector, 2009– The steady recovery of the Taiwanese The increase in food and beverage 2014 economy in 2014 resulted in an (F&B) revenue is another strategy for increase in retail sales of 3.9% department stores to improve sales. Department stores Supermarkets Convenience stores Hypermarkets year-on-year (YoY), especially in car According to the latest MasterCard 10% sales. Total car sales in 2014 reached survey, the average Taiwanese 9% 400,000 units, rising 12% YoY. One- consumer spends NT$5,280 per 8% third of these were imported vehicles. month on dining out, an increase of 7% It is believed that the growing trend 6% YoY, ranking them fi fth for this 6% in car sales will continue in 2015. It spend in Asia Pacifi c. They prefer to 5% is noteworthy that since 2013, luxury eat in food courts or restaurants in 4% and sports car brands have been department stores, with 86% of them 3% expanding aggressively. Instead of having done so in the past six months, 2% setting up shop in the city centre, particularly as food safety problems sports car brands such as Lotus, 1% cause a lot of concern in Taiwan. As Lamborghini, Ferrari and Porsche, illustrations of this trend, F&B sales in 0% 09 10 11 12 13 14 have preferred to set up showrooms ShinKong Mitsukoshi grew by 20% in science parks to target tech in 2014 and the proportion of sales Source: Ministry of Economic Affairs, Savills Research & Consultancy millionaires and young entrepreneurs. climbed to 13%, surpassing the sales The average size of showrooms of the luxury brand sector. In Pacifi c generally ranges between 500 and Sogo, it accounted for 20%. GRAPH 2 650 sq m. In addition, the growing Annual sales of department store groups, consumption power in Taichung City In Nangang Citylink, a newly-opened drew luxury car companies’ attention, department store in a transport hub, 2013–2014 including Maserati and Aston Martin, over 40% of its area is occupied by the 2013 2014 who both established fl agship stores in F&B sector; Att 4 Fun remodelled an 90 the Taichung CBD in 2014. entire fl oor, around 3,000 sq m, to be 80 a dessert food court to target women 70 Department stores and children. For retail operators, the Another sector which has taken turnover and base rents for the F&B 60 advantage of the economic recovery is sector are usually lower than other 50 department stores, with annual sales sectors, and they have to follow strict 40 growing by 6.1% to NT$306 billion in fi re codes. However, it can bring more NT$ bilion 30 2014. revenue and is an effective way to 20 attract customers. Three large department store groups 10 are the main market dominators, New supply 0 ShinKong Mitsukoshi Pacific Sogo Far Eastern Breeze Center including ShinKong Mitsukoshi, Pacifi c In past decade, several retail groups Sogo and Far Eastern. Together they shifted their expansion strategy to Source: Savills Research & Consultancy account for a total market share of target the China market, including the 54%. The largest department store top three department store groups group, ShinKong Mitsukoshi, recorded in Taiwan. For specifi c retail groups, a 5% increase in sales growth (to the domestic market has become TABLE 1 NT$79 billion) this year, while Pacifi c saturated, therefore, only Far Eastern New supply of department stores and outlet Sogo and Far Eastern both increased and Breeze Center will open new malls, 2015–2017 by 7%. Aside from Far Eastern, which stores in the next three years. The launched one department store in market share of Breeze Center is Opening GFA Name Location Type date (sq m) 2014, sales growth for the other two expected to increase to 8% and retail groups was mainly generated by strengthen its position as a member T.S. Dream Mall Shopping 2015 54,000 Tainan City Phase 1 mall existing stores. The average annual of the top four in the department store Breeze Center Department sales total for a single store usually sector. 2015 21,000 Taipei City Xinyi store ranges between NT$4 and NT$6 billion, however, two of the four department Aside from Cathy Life, Nanshan Life 2015 Gloria Outlets 51,600 Taoyuan County Outlet stores reporting over NT$10 billion is also trying to diversify their income 2015 Linkou Outlet Mall 45,000 New Taipei City Outlet were located in Taichung City. This sources, rather than focusing only is due to department stores in the on offi ce leasing. They acquired a Lecco Neihu II 2015 8,250 Taipei City Outlet Taichung department store for NT$4.8 Outlet middle or south of Taiwan usually being larger in size with a limited number billion in mid-2013. Now, through Department 2017 Far Eastern A13 66,000 Taipei City store competitors in the local market; this open bidding, they have also acquired can also help them expand their three leasehold land plots from the Source: Savills Research & Consultancy service areas to adjacent counties. government, one in Taipei City and 02 1H 2015 others in Taichung City, and are going inditex Group as does Zara, are going TABLE 2 to enlarge their involvement in the retail to enter the Taiwan market next year. Signifi cant retail transactions, 2014 sector. These brands are expected to adopt an aggressive expansion strategy and Fashion brands will be seeking large-sized retail space, Unit Amount Area price Luxury brands are continuing to both in department stores and street Date Property Location (NT$ Buyer Type (Ping) (NT$/ bil) replace their street-front store front shops, in the next few years. ping) expansions with plans to open Wanhua Mercuries neoWest G/F: Department concessions within department stores Rents and investments Apr district, 3.95 2,395 Life (Aman TiT) 4.43 mil store or premises within shopping malls. As the commercial property investment Taipei City Insurance market languished in 2014, the No. 231-1, After closing two street shops in Taipei Professional Sec. 4, Zhongxiao High Oct 1.3 168 804 mil Investment City and Taichung City since 2012, transaction amount of large-sized Zhongxiao E. Road street Institute the only remaining street shop for retail properties dropped signifi cantly E. Road Louis Vuitton is located in Zhongshan to less than NT$10 billion. The largest MODEmall Taichung Fubon Life Department Nov 2.75 18,150 150,000 N. Road; the brand is now being deal was neoWest department store (50% shares) City Insurance store presented in six department stores. (also called Aman TiT) which sold to Mercuries Life Insurance for NT$39.5, As for new-entry brands, their representing a 30% increase in price expansion actions are aggressive. in three years. Another notable deal Source: Savills Research & Consultancy Since Uniqlo entered the Taiwan was a street shop on Zhongxiao E. market in 2010, international clothing Road. It was sold for NT$1.3 billion, brands such as Zara, GAP, GU and representing a unit price of over NT$8 GRAPH 3 H&M, have expanded rapidly. By late million per ping, the resale price 2014, Uniqlo had 51 stores in Taiwan increasing by over 30%, according to Transacted retail property yields in Taipei and continued to open an average of available information. City, Q4/2013–Q4/2014 10 stores every year, outpacing the 3.0% expansion speed of other competitors. In general, rent growth in Taipei City High 2.8% The second-tier cities will be Uniqlo’s was slow in 2014 and only some areas, target market in the near future. Zara, which have major construction projects 2.6% which entered the Taiwan market one underway such as the completion of 2.4% year after Uniqlo, is still focused on a new MRT Line, can enjoy higher 2.2% Average the fi rst-tier cities and has expanded rental increases. However, the 2.0% to seven stores. Two international average rents of street shops in 1.8% major retail areas remained fi rm. For clothing brands expanded their 1.6% footprint in Taiwan in 2014: The US’ example, rents on Zhongxiao E. Road Low 1.4% GAP and Japan’s GU both launched still ranged between NT$16,000 and 1.2% their fi rst fl agship stores in Att 4 Fun. NT$30,000 per ping. Some landlords 1.0% During the past nine months, GAP even held out for high asking rents Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 has opened fi ve stores in the north of for 6 to 12 months, unwilling to Taiwan – the most aggressive new- lower them. New retail brands and Source: Savills Research & Consultancy entry brand. privately-owned retail shops began to move to second or third tier streets In light of the high return rate, behind the main streets. In terms of department store operators are restaurants, they preferred to take GRAPH 4 showing a stronger drive to invite space on the second fl oor or in the Number of stores for selected international these brands to locate in their basement, reducing costs by 50% fashion brands, 2010–2014 premises. Aside from fl agship stores, to 80% compared with opening a restaurant on a ground fl oor. 2010 2011 2012 2013 2014 the average store size of GAP and 60 GU ranges between 1,000 and 1,300 sq m.