– January 2021

MARKET IN MINUTES Retail Savills Research

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James Macdonald Senior Director +8621 6391 6688 james.macdonald@ Retail sees a steady recovery savills.com.cn Vincent Li The main city welcomed two new projects in Q4/2020 . Associate Director Nouthern China • Retail sales in Tianjin from January to December 2020 • K11 located in TEDA, New Area, and Lucky City +8610 5925 2042 declined 15.1% year-on-year (YoY). Heping Store, located in the main city prime area, are vincentx.li@ savills.com.cn expected to open in 1H/2021, bringing a new supply of • Two new projects, Vanke Times Centre in Nankai 69,000 sq m GFA. CENTRAL MANAGEMENT and Noble Plaza in District, were launched on Tianjin’s retail market1 in Q4/2020, contributing a total of 76,600 sq Andy Chee m GFA. General Manager “Two new community Tianjin • Total retail stock reached 3.67 million sq m GFA by the end +8622 5830 8886 of Q4/2020. shopping malls were andy.chee@ launched onto Tianjin’s retail savills.com.cn • The citywide vacancy rate dipped by 0.5 of a percentage Savills plc Savills is a leading global real point (ppt) quarter-on-quarter (QoQ) to 10.9%, though saw market in Q4/2020. estate service provider listed on an uptick of 0.7 of a ppt YoY. the London Stock Exchange. The Community shopping malls company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads • The average first-floor rent of citywide shopping malls stood are becoming more popular rather than follows, and now has at RMB335 per sq m per month, and the rental index was over 600 offices and associates in Tianjin’s retail market in throughout the Americas, Europe, down 0.7% QoQ and 2.6% YoY. Asia Pacific, Africa and the Middle East. This report is for general recent years as they provide informative purposes only. It may not be published, reproduced or • Tianjin’s retail market saw a steady recovery in Q4/2020. quoted in part or in whole, nor may comprehensive one-stop it be used as a basis for any Major shopping malls undertook brand adjustments and contract, prospectus, agreement holiday promotions. F&B, digital and experiential formats or other document without prior services and have consent. Whilst every effort has were the main drivers of leasing demand. been made to ensure its accuracy, development potential in Savills accepts no liability whatsoever for any direct or 1Tianjin retail market includes: main city prime area (Heping-Binjiang-Nanjing Rd), consequential loss arising from its main city decentralised areas (Xiaobailou, Youyi Rd, Laochengxiang and others) and Tianjin’s structurally use. The content is strictly Binhai New Area (TEDA and Yujiapu). copyright and reproduction of the whole or part of it in any form is unbalanced retail market. ” prohibited without written permission from Savills Research. VINCENT LI, SAVILLS RESEARCH savills.com.cn/research 1 Retail

SUPPLY AND STOCK The vacancy rate of the Tianjin’s prime area GRAPH 1: Retail Mall Supply, 2016 to 2020 Tianjin’s total retail sales of consumer stayed unchanged from Q3/2020, though goods from January to December dropped ramped up 2.3 ppts YoY to 15.3%. The 800,000 by 15.1% YoY. average first-floor rent stood at RMB532 per

700,000 sq m per month with the rental index falling In Q4/2020, two new projects, Vanke 2.6% QoQ and 4.3% YoY but remained the 600,000 Times Centre located in highest in the city.

500,000 and Noble Plaza located in Hebei District, were launched in the decentralised areas Laochengxiang in the city’s decentralised 400,000 of Tianjin’s retail market, bringing a new area recorded the best performance in sq m supply of 76,600 sq m. By the end of Q4/2020 with a vacancy rate of 4.1%, a 300,000 Q4/2020, total retail stock reached 3.67 decrease of 2.9 ppts QoQ and 8.3 ppts YoY. 200,000 million sq m GFA. Its rent stood at RMB440 per sq m per month with the rental index identical to 100,000 Leasing demand remained relatively Q3/2020 and climbing 4.0% YoY, ranking it 0 stable in Q4/2020. Shopping malls have second citywide. As for the Youyi Rd area, 2016 2017 2018 2019 2020 been increasing their appeal to tenants by the vacancy rate fell by 1.2 ppts QoQ to undergoing brand adjustments and offering 15.5% thanks to rising leasing demand. In Source Savills Research rental reductions. Electronics and sports’ the Xiaobailou area, tenants withdrawals led experiential stores were the main drivers to the vacancy rate going up 1.5 ppts QoQ to of leasing demand. Additionally, ice rinks 10.3%, and its rent remained at the median and small-sized ski areas opened across level of RMB400 per sq m per month. GRAPH 2: Retail Vacancy Rates, Q1/2016 to Q4/2020 the city, such as the ski slopes in Galaxy Plaza and Minyuan Square, promoting an MARKET OUTLOOK Citywide Heping-Binjiang-Nanjing Rd entertainment and leisure consumption Two new projects, K11 located in TEDA, Xiaobailou Youyi Rd Laochengxiang boom in the market. Binhai New Area, and Lucky City Heping 45% Store, located in the main city prime 40% VACANCY RATES AND RENTS area, are scheduled to launch in 1H/2021, 35% In Q4/2020, the citywide vacancy rate saw contributing a total of 69,000 sq m GFA 30% a slight decline thanks to stable leasing to Tianjin’s retail market. The new project

25% demand. launches will increase leasing demand and help meet the rising consumer demand in 20% Main city vacancy rate dipped by 0.5 of a the surrounding areas. 15% ppt QoQ to 10.9%, though inched up 0.7 of 10% a ppt YoY. The advantages of traditional retail areas 5% are being eroded as many markets have 0% The average of first-floor rent stood at reached a saturation point. Service-oriented Q1 Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 RMB335 per sq m per month with the rental community shopping malls located in 2016 2017 2018 2019 2020 index dropping 0.7% QoQ and 2.6% YoY. decentralised areas are expected to supply

Source Savills Research Projects in Binhai New Area maintained a majority of the future retail space. The steady rents while the ones in the main city combination of traditional shopping malls experienced rental deductions due to many in the prime area with regional retail landlords offering rent reductions in order projects will help mature the market and to raise occupancy, which consequently offer more choices for consumers. GRAPH 3: Retail Rental Indices, Q1/2016 to Q4/2020 dragged down citywide rents.

Citywide Heping-Binjiang-Nanjing Rd Xiaobailou Youyi Rd Laochengxiang 105

100 TABLE 1: Retail New Supply in 1H/2021

95

90 PROJECT GFA (SQ M) RETAIL AREA DISTRICT

85 Q2/2011=100 80 K11 35,000 Binhai New Area TEDA 75

70 Heping-Binjiang-

Q1 Q1 Q1 Q1 Q1 Lucky City Heping Store 34,000 Heping Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 Nanjing Rd 2016 2017 2018 2019 2020

Source Savills Research

Source Savills Research

savills.com.cn/research 2