RESEARCH 研究报告 GREATER CHINA PROPERTY MARKET REPORT 大中华物业市场报告 PRIME OFFICE 甲级写字楼 Luxury residential 豪宅 Q3 2013 2013年第三季 PRIME RETAIL 优质商铺 Q3 2013 Greater china Quarterly Retail property rents in Mainland China to remain stable with supply abundant are in the pipeline, providing a total a surge in supply in the third quarter. ...both tourism retail floor area of approximately In the fourth quarter, there will be no spending and local 350,000 sqm. This may result in an new shopping malls in the city’s major consumption remained increase in the vacancy rate, but with retail areas bar Shanghai Times Square in robust during the continuing urbanisation in China and Huangpu, where Lane Crawford will soft- third quarter. the government’s efforts to promote open its China flagship. Hence, retail rents domestic demand, retail rents are still are set to remain stable and the vacancy expected to grow steadily. rate is expected to see a slight rise. Beijing Shanghai Guangzhou With economic growth in Mainland China slowing, consumption growth Boosted by a number of newly launched In the first three quarters of 2013, in Beijing has also slowed. Meanwhile, malls and the peak travel season, which Guangzhou’s total retail sales rose following the Central Government’s new included the summer and Mid-Autumn 15.9% year on year to RMB502.9 billion, policy “to curb corruption and luxury Festival holidays, both tourism spending with growth up 0.3 percentage point spending”, luxury retailers have been and local consumption remained compared with the same period last more prudent about their expansion robust during the third quarter. New year. Recent signs of stabilisation in the plans in Mainland China. malls opened over this period included economy have revived the retail market the soft-opened Jing’an Kerry Centre and impacted positively on the retail In the third quarter, a number of Phase Two in Jing’an (73,000 sqm) and property market. international luxury retailers entered iapm in Xuhui (120,000 sqm) as well as or expanded in Beijing. Louis Vuitton the officially-opened Global Harbor in In July, Rock Square in Haizhu had its opened a 360-sqm store—its first Putuo (320,000 sqm). Global Harbor has official opening, providing 84,000 sqm womenswear store in Beijing—in Shin replaced Super Brand Mall to become of prime retail space. Positioned in the Kong Place, Chaoyang; Givenchy opened the largest shopping mall in Shanghai. mid end of the market, its major tenants its first Mainland flagship store in Tai include Japanese retailer Aeon, Feiyang Koo Li, Sanlitun; American fashion brand A host of international retailers continued Movie City, Zara and Uniqlo. During the Brook Brothers opened a 449-sqm store to expand in Shanghai in the third quarter. third quarter, new retail supply reached in Oriental Plaza, Dongcheng; and Italian Zara Home opened its first store in approximately 90,000 sqm, an increase MaxMara brand’s Pennyblack launched Shanghai on Nanjing West Road in of 70% quarter on quarter. in Seasons Place, Xicheng. Jing'an; Italian stylish lifestyle store 10 Corso Como opened its first boutique A number of shopping malls are due During the third quarter, high-end store in China in Wheelock Square, for completion in the fourth quarter, Parisian department store Galeries Jing’an; Mulberry opened its fourth store offering approximately 400,000 sqm Lafayette soft-opened its first store in in China in iapm, which is its largest of retail space. They will open mainly Asia in the Xidan district. With a gross flagship store in China. Meanwhile, in Panyu, such as Wanda Plaza, while floor area of 48,000 sqm, it opened with Uniqlo opened its largest flagship store no new shopping malls will open an occupancy rate of 90%. in the world, covering 8,000 sqm in downtown. Guangzhou’s leasing market Huangpu. Ikea opened its largest store faces a number of uncertainties, arising The fourth quarter is traditionally a peak in Asia, spanning 55,032 sqm in Baoshan. from the emergence of multiple retail season for retail sales. A number of H&M launched its first menswear store areas, an increase of new supply and the new shopping malls—such as Xanadu in China in Global Harbor, covering over continuing growth of online shopping. Plaza in the CBD; Wynn Mall in Yansha; 500 sqm. As a result, occupancy rates may drop Guangyao Dongfang Plaza in Haidian; and rents may plateau or even decline in Baoyuan International Mall in Fengtai Shanghai’s retail property market is the near future. and Jinyu Vanke Plaza in Changping— expected to quieten after experiencing 2 KnightFrank.com.cn Economic indicator and real estate policies According to the Economist Intelligence Table 1 Unit, China’s GDP growth is expected to Economic indicators reach 7.5% in 2013. Beijing Shanghai Guangzhou Hong Kong Figure 1 Real GDP growth in China GDP growth (1-3Q 2013) +7.7% +7.7% +12.9% +3.0% 16% 14.2% Total GDP contribution to 14% 3.6% 4.0% 2.9% n/a the country (1-3Q 2013) 12% 10.4% Inflation rate (Sep 2013) +3.3% +2.5% +2.8% -0.4% 10% 9.6% 9.2% 9.2% 7.8% 8% 7.5% 7.3% 2.0% 4.2% 2.6% 3.3%# Unemployment rate 6% (2012) (2012) (2012) (2Q 2013) 4% $0.2B $0.4B $1.1B $726.0B 2% FDI in real estate (USD) (1-3Q 2013) (2012) (2010) (2010) 0% 2007 2008 2009 2010 2011 2012 2013F 2014F Year-on-year growth in +11.3% +10.1% +7.1% +16.8% Source: National Bureau of Statistics / (utilised) FDI (2013) (1-3Q) (1-3Q) (1-3Q) (1Q) Economist Intelligence Unit Year-on-year growth in +8.6% +8.7% +15.9% +12.5%# retail sales (1-3Q 2013) Prime lending rate 6.15%^ 6.15%^ 6.15%^ 5.00%* (3Q 2013) Source: CEIC / National Bureau of Statistics of PRC / Census & Statistics Department of HKSAR ^ People’s Bank of China # Provisional * HSBC prime lending rate In June, The formal approval of Shenzhen Table 2 “Qianhai Shenzhen-Hong Kong Modern Major real estate market policies Service Industry Cooperation Zone Comprehensive Plan” was announced. Beijing Beijing released the “Self-use Residential Property Policy” in October. Qianhai will adopt a “Three districts, Registered families in Beijing owning no homes or only one home and qualified unregistered families owning no homes are allowed to buy two zones” urban planning structure one self-use residential property. Most such properties have a gross to become a globally competitive hub floor area of less than 90 sqm, with the biggest being less than 140 for the modern service industry and a sqm. Their prices are about 30% lower than those of properties in the same locations with similar quality. Beijing Municipal Bureau of Land modern, international coastal city centre. and Resources will provide land for 20,000 such units by end 2013 and another 50,000 units in 2014, accounting for over 50% of total Figure 2 residential land supply. Required reserve ratio for large banks Shanghai In July, Shanghai Huangpu District Government announced to release "Ten initiatives to develop Bund Financial Innovation Pilot Zone." There will be a cluster for Internet-based financial companies, attracting firms involved in online banking, insurance and securities. In September, Huangpu District Government released Detailed Guideline to Develop Bund Financial Innovation Pilot Zone, allowing such leading companies to use “the Bund” in their company names, while previously this was strictly limited. The Zone will offer preferential policies including higher bonus and awards for financial innovation firms. For example, innovation awards up to RMB500,000 will be presented to outstanding enterprises. The government will also subsidise rental office refurbishment and offer subsidies and accommodation to talents attracted to the zone. Source: People's Bank of China Guangzhou In October, Guangzhou Urban Planning Bureau announced “Master Plan for Guangzhou Sub-city Centre Zengcheng”, positioning the county-level city as a sub-city centre with planned infrastructure projects including Wanda Plaza, Zengcheng Stadium, Central Square, Administrative Office Centre and Zengcheng Square. The core area of Zengcheng will include Licheng Street, Zengjiang Street and Shitan Town with an administrative area of 376 sq km, covering a population of 700,000 by 2020. Ten tram lines spanning 175.5 km have been added to Zengcheng’s urban planning. 3 Q3 2013 Greater china Quarterly PRIME OFFICE Prime office Peak rental cycle Beijing Guangzhou Shanghai Hong Kong Trough Figure 3 Table 3 Grade-A office price index Average prices, rents, vacancy rates and yields [1][2] Q1 2003 = 100 Price Rental Vacancy City Yield (US$ psm) (US$ psm per month) rate Beijing $9,196 $63.0 3.9% 6.2% Guangzhou $5,660 $28.9 20.0% 6.3% Shanghai $8,261 $45.1 4.4% 5.8% Hong Kong $26,413 $67.0 3.7% 2.9% [1] Average prices and rents are derived from different baskets of buildings, hence the two should not be used to estimate average yields. [2] Prices and rents are calculated on gross floor areas. Table 4 Supply and demand indicators City Indicators Comments Beijing No new Grade-A office projects Runshi Center, Fortune Plaza III and were launched in the third quarter. Ocean International Center II will be launched in the fourth quarter, Grade-A office rents fell 0.9%, while providing a total of 265,000 sqm of Figure 4 vacancy rate dipped 0.2 percentage Grade-A office space. point to 3.9% quarter on quarter. Grade-A office rental index Due to economic slowdow, rents Q1 2003 = 100 continued to move downward slightly.