– February 2020

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RESEARCH James Macdonald Senior Director Three new projects launch in emerging areas +8621 6391 6688 james.macdonald@ Nanjing’s first Paradise Walk entered the market in Q4/2019, bringing up the savills.com.cn overall quality of the city’s retail facilities CENTRAL MANAGEMENT • Retail sales of consumer goods in Nanjing reached RMB504.0 • Vacancy rates in prime areas decreased 0.1 of a percentage billion in Oct 2019, up 5.4% year-on-year (YoY). point (ppt) QoQ to an average of 4.2%. In non-prime areas, Jeremy Sun the vacancy rate increased by 0.1 of a ppt QoQ to 5.4%. General Manager • Three new projects launched in Q4/2019, increasing the mid-to Nanjing high-end retail stock to approximately 4.77 million sq m. • With the launch of new projects, the retail market in non- +8625 5772 0911 prime areas is maturing and improving. jeremy.sun@ savills.com.cn • The citywide shopping mall vacancy rate remained stable at 5.1% in Q4/2019.

Savills plc Savills is a leading global real • Average mid-to high-end shopping mall first-floor rent estate service provider listed on decreased 0.2% quarter-on-quarter (QoQ) to RMB13.7 per sq the London Stock Exchange. The company established in 1855, has m per day. “Both popular internet brands a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has and fashion houses are over 600 offices and associates • F&B and clothing brands were the main demand drivers in throughout the Americas, Europe, Q4/2019. Asia Pacific, Africa and the Middle expanding and entering East. This report is for general informative purposes only. It may not be published, reproduced or • The average first-floor rent of prime areas (Xinjiekou, Nanjing, providing major quoted in part or in whole, nor may it be used as a basis for any Confucius Temple and Hunan Road) remained stable at contract, prospectus, agreement RMB22.9 per sq m per day, and the average first-floor rent of stimulus to the city’s rising or other document without prior consent. Whilst every effort has non-prime areas decreased by 0.3% to RMB10.0 per sq m per been made to ensure its accuracy, consumer spending.” Savills accepts no liability day. whatsoever for any direct or consequential loss arising from its JAMES MACDONALD, SAVILLS RESEARCH 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. savills.com.cn/research 1 Retail

ECONOMIC OVERVIEW completion in Q4/2019. Wtih the launch of new GRAPH 1: Shopping Mall Supply, 2014 to 2019 Citywide retail sales maintained their steady projects and several tenant mix adjustments, growth in 2019, exceeding RMB504.0 billion consumers and brands will come back to 450,000 by the end of October 2019, up 5.4% YoY. the area after renovations are complete. The vacancy rate remained high at 9.2%. Rents in 400,000 SUPPLY AND STOCK the area were stable at an average of RMB10.2 350,000 Three new projects launched in Q4/2019, per sq m per day during Q4/2019. so the mid-to high-end retail stock rose Confucius Temple - After one-year 300,000 to approximately 4.77 million sq m. With transformation period, the Confucius Temple 250,000 the launch of these new projects, all area is attracting more consumers due to

q m located in emerging areas, Nanjing’s retail its good traffic, great location and numerous s 200,000 market is showing signs of improvement fashion brands, with a footfall increase of 150,000 and maturation.. Additionally, it is worth 13.0% (YoY). The vacancy rate remained mentioning that Nanjing’s first Paradise Walk low level at 2.0%, while rents held stable at 100,000 entered the market in Q4/2019 and helped RMB21.2 per sq m per day. 50,000 bring up the overall quality of the city’s retail Xinjiangdong - No new projects entered facilities. the Xinjiangdong market in 2019, and some 0 2014 2015 2016 2017 2018 2019 projects are adjusting their tenant mixes to RETAILERS improve their attractiveness. Suning Plaza Source Savills Research F&B and clothing retailers were the main is scheduled to introduce private brands demand drivers in Q4/2019. Balenciaga, a to strengthen the appeal of the projects. In well-known luxury fashion brand, re-entered Q4/2019, the vacancy rate was stable at 2.8% Nanjing thanks to the high spending power in and average first-floor rents in the area also this city in recent years. remains to remained stable at RMB12.4 per sq m per day. GRAPH 2: Sub-market Vacancy Rates, /2015 to be the popular shopping centre for many high- Hexi CBD - The vacancy rate in Hexi CBD Q4/2019 end brands in Nanjing. decreased by 0.8 of a ppt QoQ to 6.0%, while City-wide Xinjiekou Hunan Road the average rent in the area stayed stable Hexi CBD Confucius Temple Xinjiangdong VACANCY RATES AND RENTS at RMB8.3 per sq m per day. IFC mall is 35% Citywide shopping mall vacancy rates scheduled to enter the market in 2020 and will remained stable at 5.1% in Q4/2019. Vacancy help the district challenge Xinjiekou in the 30% rates in prime areas decreased 0.1 of a ppt QoQ number of high-end brand resources. 25% to 4.2%. In non-prime areas, the vacancy rate increased by 0.1 of a ppt QoQ to 5.4%. MARKET OUTLOOK 20% The average first-floor mall rent saw a minor Three new projects (Paradise Walk, MS Mall, 15% decrease of 0.2% QoQ to RMB13.7 per sq m MONG KOK) launched in Q4/2019, all located per day in Q4/2019. In prime retail areas, rents in emerging areas. Over the course of the 10% remained stable at RMB22.9 per sq m per quarter, the retail market in Nanjing improved 5% day. Non-prime area average rent decreased its retail market with these new projects by 0.3% to RMB10.0 per sq m per day during and several higher end brands opening 0% Q4/2019. or expanding. Many high-profile projects Q1 Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 - The vacancy rate remained low (Paradise Walk, Wangfujing, Shopping 2015 2016 2017 2018 2019 Xinjiekou at 2.4% while average first-floor rent was the Centre.) are scheduled to enter the market

Source Savills Research city’s highest at RMB33.9 per sq m per day. next year and they will strengthen their Xinjiekou is still holds a monopoly position in respective area’s appeal. In addition, many Nanjing and it is attracting a numerous high- smaller projects will open in the future and end brands. The government plans to develop it is expected that these smaller projects will underground space in Xinjiekou to cover the play a more important role in the city’s retail weak underground commercial space. scene in the future. GRAPH 3: Submarket Rental Indices, Q1/2015 to Q4/2019 Hunan Road - The six-month renovation of buildings in the Huan Road area neared City-wide Xinjiekou Hunan Road Hexi CBD Confucius Temple Xinjiangdong 270

250 TABLE 1: Selected Leasing Transactions In Q4/2019 230

210

190 TENANT CATEGORY PROJECT AREA GLA (SQ M) 170

150

Q3/2012=100 %Arabica F&B Deji Plaza Xinjiekou 60 130

110 Balenciaga Clothing Deji Plaza Xinjiekou 350 90

70 Confucius

Q1 Q1 Q1 Q1 Q1 Lelecha F&B Aqua City 50 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 Temple 2015 2016 2017 2018 2019

Source Savills Research Source Savills Research

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