Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

Greater China Retail Supply/Demand Trends — New Concepts for a Changing Market

Mandy Qian • 31/08/2023
Cushman & Wakefield today released its annual Greater China Retail Supply/Demand Trends report. According to the report, by Q2 2023, the total prime retail property stock in the core markets in the 16 major cities in Greater China that the firm tracks totaled 106.0 million sq m. Many international and domestic brands either opened their first store or accelerated their business expansion in China, demonstrating an increasing demand for retail space in the market. The total premium core city retail property net absorption across the Greater China market for the first half of the year was 2.66 million sq m. The overall vacancy rate seen in the 16 major cities in Greater China decreased to 11.01% in Q2 2023.
 
Duke Zhen, Managing Director, Head of Retail Services, China, Cushman & Wakefield, said, “Since 2023, China’s Ministry of Commerce has organized a number of ‘Consumption Boosting Year’ activities and introduced a series of measures to optimize consumption supply and boost consumer confidence. With the implementation of a package of these consumption policies, the Chinese consumer market has fully recovered. Ahead, the size of China's retail market will continue to expand, with new retail models and technologies expected to drive greater transformation within the retail industry in China and at the same time meet the ever-changing and increasing needs of consumers in the country.”
 
China's retail property market is and will continue to be a popular investment destination for investors, developers and retailers, given the measures from the central and local governments to stimulate consumption, Chinese consumers’ continual pursuit in upgrading the goods that they buy, the launch of retail property C-REITs, and the general sustainable development within the overall retail industry.
 
Shaun Brodie, Head of Business Development Services, East China & Greater China Research Content, Head of Greater China Occupier Research, Cushman & Wakefield said, “In Greater China, consumer demand volume still has potential to be further expanded. Looking forward to the future, a series of policies to promote consumption will be implemented to drive this expansion as well as the upgrading of China's consumer market. Retailers and landlords of shopping centers will need to keep up with the latest market trends and constantly innovate to meet the increasingly diverse consumption needs of Chinese consumers.”
 
In order to cater to the changing market and increasingly diversified needs of Chinese consumers, shopping center owners and retailers will continue to try to broaden the consumption market and innovate new business models and retail concepts. In terms of demand, the main focus trends are and will be as follows:
 
  • The general boosting of consumption
  • Chinese brand expansion
  • Auto brand demand
  • Pop culture-driven development
 
Looking ahead, Cushman & Wakefield expects a number of factors, including a series of pro-consumption policies and individual city initiatives, to drive retail market growth.
 
Beijing
By the end of H1 2023, the total stock in Beijing's retail market was 16.1 million sq m, of which shopping centers recorded 14.2 million sq m.
 
With improving consumer sentiment, customer footfall in shopping centers in the city gradually rebounded in H1 2023. Additionally, new store openings were mainly high-end boutiques and the launches of branded first stores, especially in the high-end fashion retail sector. As of H1 2023, the average asking rental in the core submarkets dropped slightly to RMB2,250 per sq m per month, while the vacancy rate remained stable at 10%.
 
With the gradual recovery of the consumer market, the pace of upgrading and renewal in the Beijing retail market picked up. Around 1 million sq m of new supply is scheduled to enter the market in H2 2023. We expect that the continued enhancement of the retail environment and higher project quality will create new consumption growth points and boost the development of Beijing as an international consumption center city in the near future.
 
Shanghai
According to the Shanghai Municipal Bureau of Statistics, the city’s consumer goods retail sales totaled RMB937.8 billion in H1 2023, increasing by 23.5% y-o-y. Strong retail market fundamentals have continued to attract interest in Shanghai’s retail market from brands, investors and developers, as reflected in the launch of five new projects during H1 2023.
 
By the end of Q2 2023, the overall vacancy rate in the Shanghai mid- to high-end shopping center market fell to 9.6%, down 0.5 percentage points q-o-q. Demonstrating the strong recovery in the retail market, this is the lowest vacancy rate recorded for the city’s prime retail property market since 2022. Meanwhile, the average first floor asking rent in core areas climbed to RMB1,891.9 per sq m per month, up 0.5% q-o-q. 
 
To capitalize on the opportunities in Shanghai’s expanding consumer market, more overseas and domestic retailers, ranging from fashion to food and beverage (F&B) brands, are planning to enter or further penetrate the retail market with ambitious business expansion plans. Thus, the overall vacancy rate is expected to fall within a reasonable range into the rest of 2023.
 
Shenzhen
The opening of the Rail In project and Shenzhen MixC Phase III in H1 2023 pushed Shenzhen’s total prime retail stock to 6.4 million sq m. 
 
Shopper footfall in shopping centers displayed a clear improvement in the first half of this year, with demand for F&B and essential goods most active. The citywide vacancy rate subsequently dropped 1.4 percentage points over the half year to 9.0% at the end of Q2. Most landlords hold an optimistic attitude to the future market and as a result, prime space rental levels remained firm at RMB809.4 per sq m per month. 
 
Shenzhen is expected to add 1.1 million sq m of new supply through to end of 2024. Some F&B brands are seeing opportunities and expanding to benchmark projects in the emerging submarkets, albeit with a more cautious attitude. The city is aiming to further develop its consumption center credentials via shopping promotions, attracting new brands and first stores, and expanding the events sector. Nonetheless, the full resumption of consumer demand will depend upon overall economic recovery, disposable income improvement, and the restoration of consumer confidence.
 
Guangzhou
In the first half of 2023, the gradual restoration of normal production and living promoted improvement in Guangzhou's macroeconomic environment. However, the retail property market will take some time to recover. Over the past six months, no new supply completed in Guangzhou’s prime retail market. Thus, total stock remained at 5.01 million sq m. 
 
The increase in operating revenue has brought confidence with some brands now expanding their business. Thus, after experiencing four consecutive quarters of increase, the city’s overall vacancy rate has dropped to 7.0%. Subsequently, the rental level within the core business district has remained robust, supporting the stability of the city's average rent in the first half of the year.
 
It is expected that 679,000 sq m of new supply will enter the market through the second half of 2023, making market competition more intense. Looking ahead, the improvement in consumer purchasing power and market confidence is expected to bring further support to Guangzhou’s retail property market.
 
Chengdu
In H1 2023, the entrance of Joyous Time into the market brought about 200,000 sq m of new supply, pushing the city's total stock up to 7.98 million sq m. In 2023 Q2, Chengdu's retail market stock ranked third in the country, trailing only Beijing and Shanghai.
 
Because most of the new projects are large-scale community commerce or regional projects, rental in Chengdu's retail market continued to show a downward trend. This quarter, the city’s average rent dropped by 0.59% q-o-q to RMB611.21 per sq m per month. Meanwhile, with the easing of the pandemic, activity within Chengdu's retail market increased. Subsequently, the city’s overall vacancy fell a further 0.68 percentage points y-o-y to 6.18% in Q2 2023.
 
In H2 2023, with the entrance of two high-quality retail property projects, Tianfu Joy-City and Tianfu Merchants Garden City, into the market, a new business center in Chengdu is expected to take shape.
 
Hangzhou
Since the beginning of this year, the Hangzhou government has systematically promoted the "8+4" policy system, with an all-out effort to generate an economic turnaround. Thanks to this, the city's consumer market continued to pick up in H1 2023.
 
The continuously optimized business environment has prompted vitality in the market. During H1 2023, two commercial projects, with a combined 305,000 sq m of new retail space, opened in Hangzhou. Meanwhile, the existing stock of retail properties continued to create strong content drivers through the enrichment of brands, operational innovation and the enhancement of the shopping experience. These moves have helped to strengthen competitive advantages.
 
Acting as a significant measure to implement the strategy of expanding domestic demand, in the near future, the normalized issuance of consumer infrastructure REITs will help to revitalize the stock assets of prime retail properties in Hangzhou and promote the transformation of the industry's operating model in the city.
 
Hong Kong
Over the past six months, with Hong Kong's border reopening with the world, the number of visitors to the city has increased significantly. The retail market has gradually recovered, and various economic indicators have shown improvement. In addition, the Hong Kong government has distributed consumption vouchers to further stimulate spending in the retail market. 
 
With this positive news, retailers have reviewed and strategized their expansion plans. Among different retail categories, those popular with mainland visitors have benefited the most from the border reopening. Over the last six months, leasing activities have been most active in the  pharmacy, jewelry and watch brand sectors.
 
The gradual recovery of leasing activities has also led to a steady increase in rents on high streets, while the vacancy rates in various submarkets have continued to drop. Significantly, the average vacancy rate fell to about 9% in Q2 2023, which is a three-year record low. 
 
Finally, the consumption pattern of mainland visitors has shifted towards experience-based activities rather than pure consumer-based ones, which has deterred some large brands from expanding.
 
Taipei
Last year, as vaccination rates rose and restrictions eased, the business districts in Taipei gradually began to recover, boosting  retailer confidence in the city and filling vacant units.
 
By Q2 2023, the vacancy rate in Ximen in particular had dropped for four consecutive quarters, reaching 11.1%. Meanwhile, due to a lack of compelling retailer attraction in the short term, the vacancy rate in Zhongxiao remained at 13.8%. In Zhongshan-Nanjing, retail business activity remained with the submarket’s vacancy rate reaching 5.3% at the end of the fist half of the year.
 
In the latter half of H2 2023, international tourists are expected to return. Domestic tourism, however, will continue to remain the key driver for consumption in Taipei’s retail market. 
 
Today, in the wake of the pandemic, consumers are now prioritizing quality of life, preferences, and unique experiences. The focus for commercial retail spaces in the city is now on creating unique retail environments and shopping experiences rather than just simple product display.
 
Please click here to download the full report.
 
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in approximately 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region. In 2022, the firm reported global revenue of US$10.1 billion across its core services of valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail, and others. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), Environmental, Social and Governance (ESG) and more. For additional information, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

RELATED NEWS

HK Residential Market Report Q1 2023
Hong Kong Border Reopening With Mainland Supported Q1 Market Recovery

With the border reopening between Hong Kong and mainland China enacted in early February, coupled with the reduction of Ad Valorem Stamp Duty (AVD) in the 2023/2024 Budget, property buyers have regained confidence in the residential market, with prices rebounding. Residential transactions picked up in Q1 and are expected to record an increase of 49% q-o-q, to approximately 12,500 transactions.
 

Rosanna Tang • 16/03/2023

China Top Office Supply & Demand Trends Report 2023
Return to Office Recovery in 2023: Greater China Top Office Supply/Demand Trends Report 2023

Cushman & Wakefield has released its annual Greater China Top Office Supply/Demand Trends report. According to the report, by end of Q4 2022, the total Grade A office inventory in the core markets of the 21 major cities in Greater China that the firm tracks totalled 65.3 million sq m. Total premium core city office net absorption across the Greater China market for the whole year was 1.0 million sq m, a drop of 74.3% from the figure registered at the end of Q4 2021.
 

Mandy Qian • 16/03/2023

China Capital Markets Beijing Suning Life Plaza Transaction 2023
Cushman & Wakefield Capital Markets Facilitate US$400 Million (RMB2.81 Billion) Beijing Suning Life Plaza Transaction

Cushman & Wakefield's Greater China Capital Markets team have successfully facilitated the acquisition by CapitaLand of the Beijing Suning Life Plaza mixed-use development from Suning for a total consideration of RMB2.81 billion (approximately US$400 million). 
 

Rosanna Tang • 06/03/2023

China Commercial Real Estate Market Trends 2023
China Commercial Real Estate Market Trends 2023

A panel of senior Cushman & Wakefield subject matter experts shared an in-depth discussion of China’s key commercial real estate market trends for 2023 at an online seminar held on February 9, 2023.

Mandy Qian • 20/02/2023

 ANREV Investment Intentions Survey Asia Pacific 2023
Global Investors Set to Expand Allocations to Asia Pacific Real Estate, Finds New Survey

Institutional investors plan to maintain their allocations for real estate globally, according to the 2023 Investment Intentions Survey published by ANREV, INREV and PREA. Of note, investors in Asia Pacific indicate an expectation of raising real estate allocations. Over half of the survey respondents indicate an expectation to increase their allocations to Asia Pacific real estate over the next two years.

Mandy Qian • 10/02/2023

Global Data Center Market Report 2023
Hong Kong Jumps to Fourth-Placed Ranking in Global Data Center Market Comparison

Hong Kong has reconfirmed its position as a top data center market globally in Cushman & Wakefield’s latest Global Data Center Market Comparison report. Hong Kong jumped to fourth in the overall rankings in the new report, scoring highly across categories; with strong connectivity, consistent demand, availability of cloud services and a business-friendly tax structure offsetting high land prices.
 

Mandy Qian • 06/02/2023

Global Office of The Future Report 2022
New Report Confirms Hybrid Office is Becoming the New Norm Globally

Our latest insight establishes three realities: demand for office space is accelerating, hybrid is here to stay, and the role of the office has changed — and we explore their implications for office-using companies and workers.

 
 
 

Mandy Qian • 19/07/2022

HK Residential Market Report Q2 2022
Hong Kong Home Prices Stabilize in Q2 as Transactions Jump 48%

With the fifth wave of the pandemic gradually being brought under control, the city’s residential market has been progressively recovering since the month of April. Total transactions in Q2 are now expected to reach 14,900, up 48% q-o-q, although this still represents a drop of 32% y-o-y.

14/06/2022

Asia REIT Market Outlook Report 2021 2022
Industrial REITs Well Positioned for Long-Term Growth

Real Estate Investment Trusts (REITs) in Asia demonstrated relative resilience through the peak COVID-19 period, backed by robust capital structures, sufficient financial liquidity, and supportive regulatory policies. All REIT classes gained overall momentum to recover strongly during 2021, when the annualized total return rate of REITs of each property type turned from negative to positive.

Mandy Qian • 09/06/2022

 China Post Lockdown Recovery June 2022
Post-Lockdown Recovery

Several COVID-19 Omicron variant outbreaks have had a major impact on production and life in general in some Chinese cities. Local governments have taken active measures to deal with the epidemic and effectively promote steady economic growth. As production and markets reopen in cities like Shanghai, we believe economic recovery is at hand.

Mandy Qian • 07/06/2022

HK Investment Market Report 1H
Steady Growth in Hong Kong Investment Activities in 1H 2022

Full-year 2022 investment transaction volume in Hong Kong is now expected to reach HK$70 billion, with industrial assets and development sites continuing to be sought-after.

24/05/2022

Mainland China Data Centers 2022
Data Centers in Mainland China

According to the Data Centres in Mainland China - Four Points to Process in 2022 report, at the beginning of 2021, cabinet stock in China touched 3.6 million, with the anticipation that this number will surpass 4 million.

Mandy Qian • 07/04/2022

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
MORE OPTIONS
AGREE AND CLOSE
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS