In the first half of 2022, China‘s economic growth rate slowed due to the impact of the epidemic. As a result, the stock of prime retail properties in 16 major cities in China didn’t see much new supply enter the market during the first half of this year. At the end of H1 2022, retail supply reached 97.2 million sq m. Meanwhile, the average rental for prime retail properties in major cities in China was RMB735.5 per sq m per month at the end of Q2 2022, a drop of 0.9% quarter on quarter (q o q).
Looking to the future, the long term fundamentals of China‘s retail market remain solid. Shopping centers continue to optimize their operations, upgrade their facilities and adjust their brand mixtures to prepare for the recovery in the consumer market.
In terms of supply, the main trends and influencing factors are as follows:
- The recently released policies to stimulate market consumption
- On demand community retail coming to the fore
- A continued focus on omni channel retailing
- Sustainability being taken ever more seriously by shopping center investors, developers and operators
Affected by multiple factors, including China’s economic development, population change, the expansion of the Internet and the spread of smartphones, COVID 19 and consumer behavior, to name a few, consumption in China has transformed. China’s retail market continues to introduce new business models, new types of services and innovative retail formats to adapt to changing consumer groups and consumption patterns.
In terms of demand, there are many trends impacting the market in China but five which we look into in a little more detail include:
- The rise of new consumption brands
- F&B enterprises expanding into the semi prepared meal market
- The ‘new baking’ concept bringing new business opportunities for bakeries
- ‘Green consumption’ ushering in new prospects for retailers
- New trends driving sport and fitness retailer growth
