Research 研究报告 SHANGHAI Retail market report 上海商铺报告 Knight Frank 萊坊 Q4 2012 retail 二零一二年第四季 商铺 Q 4 2012 shanghai retail Quarterly highlights In the fourth quarter, the Outlook As most new supply will performance of Shanghai’s retail be concentrated in core market saw both positive and We are optimistic about the Shanghai negative factors. On the one hand, retail real estate market in 2013 as a retail areas in 2013, we consumers demonstrated strong number of mid to high-end shopping expect prime retail rents malls are planned for opening in core desire to spend during the holiday will continue their upward season as all retail stores witnessed areas of the city and demand is set to year-on-year increases in sales sustain. The most anticipated trend with a year-on-year during the Golden Week holiday in projects include Kerry Properties’ growth of about 10-12% Jing’an Kerry Centre Phase II (86,000 October. On the other hand, two more but the occupancy rate traditional department stores, both sq m) on Nanjing West Road, Sun with long histories, shut down Hung Kai Properties’ International will drop slightly. apm (100,000 sq m), New World because of strong competition from online shopping platforms and Development’s K11 Art Mall on fast-fashion brands. Huaihai Middle Road (50,000 sq m). In the Hongqiao CBD, LVMH Group’s In 2012, the annual retail supply in L'Avenue and Treasury China Trust’s Shanghai reached 563,350 sq m, The HQ will provide retail GFAs of down 14.5% compared to 2011. In the 49,000 sq m and 31,000 sq m fourth quarter, four new retail malls respectively. The expansion of luxury with a total gross floor area (GFA) of brands has slowed but the focus 165,000 sq m opened. remained on core areas. Fast-fashion groups such as Inditex will accelerate Ground-floor rents in core retail areas the expansion of their major stores reached RMB54.7 per sq m per day, as well as the groups' other brands, an increase of 1.7% quarter on such as Inditex Group's Massimo quarter and 11.6% year on year. The Dutti, Bershka, Stradivarius and Pull vacancy rate for shopping malls & Bear. Some fashion brands that remained at 8.4%, the same level as have yet to enter Shanghai are the previous quarter. currently seeking store locations, for example British fast-fashion brand In recent years, community shopping Topshop will open its first China store malls have emerged in non-core in Pudong Lujiazui in 2013. areas and have gained popularity As most new supply will be among consumers. In the fourth concentrated in core retail areas such quarter, several community shopping as Huangpu and Jing’an districts in malls exhibited increased rents. 2013, we expect prime retail rents will continue their upward trend with a The rise in online shopping and fast fashion brands imposed pressure on year-on-year growth of about 10-12% traditional department stores with but the occupancy rate will drop shrinking potential for growth. Many slightly. Supported by investors’ department stores were considering strong interest in commercial real conducting adjustments or estate, retail prices are set to stay repositioning to survive under the firm. The retail market will also see an increase in large-scale fierce competition. transactions. 2 KnightFrank.com.cn Market overview Consumers demonstrated In the fourth quarter, Shanghai’s retail in the fourth quarter. Under increasing market performed both positively and pressure from online retail rivals, two their strong desire to spend negatively. Consumers demonstrated more department stores, namely during this holiday season. strong propensity to spend in the Spring Department Store on Sichuan During eight-day Golden holiday season. During the eight-day North Road and Novel Department Golden Week holiday, Shanghai Store on Huaihai Middle Road, were Week holiday, Shanghai received 7.92 million tourists, an forced to close. Traditional department received 7.92 million increase of 21% compared to the stores have reached a bottleneck tourists, an increase of 21% previous year and the 5,000 retail point in their growth. With the rapid stores in Shanghai achieved total growth of online retailing and the compared to the previous retail sales of RMB6.43 billion, a ambitious expansion of fast-fashion year. year-on-year increase of 9.2%. The brands, small and medium-sized retail market saw four new retail malls’ department stores have shrinking opening in the quarter, adding a total growth potential. On 11 November of 165,000 sq m of space to the 2012 (the “Singles Day” in China), one market. In the fourth quarter, the of China’s e-commerce giants TMALL average ground-floor rent in core retail (tmall.com) achieved a sales volume areas was RMB54.7 per sq m per day of RMB19.1 billion, four times higher with a quarter-on-quarter increase of than the annual retail sales of Nextage 1.7%. Shopping malls’ vacancy rate Department Store, one of the best remained at 8.4%, same as the performing department stores in previous quarter. However, traditional Shanghai. department stores did not fair as well Shanghai Retail Sales of Consumer Goods, 2000-2012 Retail Sales of Consumer Goods (LHS) Growth Rate (RHS) 800 RMB billion % 20 18 700 16 600 14 500 12 400 10 8 300 6 200 4 100 2 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Shanghai Statistics Bureau/Knight Frank 3 Q4 2012 shanghai retail Quarterly Supply and Demand In 2012, the annual retail In 2012 the annual retail supply in renovation. This retail mall was the Shanghai reached 563,350 sq m, fourth new mall opened in the Sichuan supply in Shanghai reached down 14.5% compared to 2011. In the North Road retail area, following Cloud 563,350 sq m, down 14.5% fourth quarter, four new retail malls, Nine Hongkou Mall, Laox Life Plaza compared to 2011. with a total GFA of 165,000 sq m, and Citic Shenhong Plaza, with a retail opened. The four malls were GFA of 27,900 sq m from basement Takashimaya and Gloria Department two to level three. On 28 December, Store in Changning District, One Prime River Mall Phase One officially opened in Hongkou District and The River Mall in Pudong. Based on the former Expo Phase One in Pudong. New supply in Axis, this shopping mall was jointly quarter four increased 41% compared redeveloped by Expo Shanghai Group with the previous quarter. However, and Brilliance Group. Phase One is these new malls were relatively small positioned as a food & beverage mall, with average mall size less than with major tenants including Wang 100,000 sq m, thus the annual new Ding Teppanyaki & Japanese supply decreased by 44% compared Restaurant, BullFighter Steak House, with the previous year. The first Sichuan Folk, Musk Cat Coffee, Xian Yu Takashimaya Department Store in Xian and Inlead KTV. The entire Shanghai launched in the Changning development of 330,000 sq m is to Gubei Area on 19 December. Located fully open in 2013. in Gubei International Fortune Centre Phase II, Takashimaya had a total Despite the overseas economic retail GFA of 62,000 sq m from malaise and China’s slowing economic basement to level seven. Takashimaya growth, retailers’ confidence in the was one of the largest high-end market remained and they continued department stores in Japan with 180 to open new stores in Shanghai. The years of history, targeting mid to world’s first Yves Saint Laurent Paris high-income consumers from boutique of 300 sq m was launched in Shanghai and the Yangtze River Delta Reel Department Store in the quarter. Region. Gloria Department Store was Similarly, following the opening of its located in Multimedia Plaza in the first boutique in China at the Zhangshan Park retail area and has a Peninsula hotel in Beijing in early retail GFA of 25,000 sq m from 2012, Italian luxury fashion brand. basement to level four, targeting at the mid-end market. One Prime, AM Roberto Cavalli opened its second alpha GmbH’s first project in China, store in Mainland China in Plaza 66 on opened on 9 November. Nanjing West Road. The boutique had a store area of 140 sq m selling One Prime, previously known as women’s wear. In the same month, Tianchen Rose Plaza, was located on Belgian bags and luggage brand Sichuan North Road. Tianchen Rose Hedgren opened its first flagship store Plaza was acquired by AM alpha in in China on Huaihai Road, one of the early 2010 and reopened as One major retail areas in Shanghai. Prime, a mid-end shopping mall, after Specialised supermarkets had also 4 KnightFrank.com.cn been expanding in Shanghai. In the highest number among all December, French sporting goods Mainland cities. The stores moved chain store Decathlon opened four closer to core areas but the space stores in Jiading, Caoyang, Dahua and requirement declined from 5,000-8,000 Dalian Road respectively. The number sq m to 3,000-5,000 sq m. of Decathlon stores in Shanghai totaled 14, Rent Shanghai retail rent in core areas (2006Q1 to 2012Q4) Recently, community 60 RMB/sqm shopping malls emerged net/day as a new and popular retail 55 format in non-core retail 50 areas. In the fourth quarter, 45 driven by a reliable 40 consumer base and a 35 diverse trade mix, retail 30 rents in many community 25 shopping malls increased. 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2008 2009 2010 2011 2012 Source: Knight Frank Research Prime retail rents continued to grow in Recently, community shopping malls the fourth quarter of 2012.