31 Oct 2016
SHANGHAI RETAIL MARKET REPORT Q3 2016
OVERALL VACANCY RATE INCREASED TO 11.4% IN Q3
In Q3 2016, no new retail malls opened in core commercial areas, whilst six opened in non-core areas.
Retail rents in prime areas increased slightly despite higher overall vacancy rate driven by several shopping areas’ ongoing renovation.
Most new retail malls were mid-tier positioned community shopping centres. Two Powerlong Plaza centres opened in the quarter, which were the brand’s 5th and 6th community malls in Shanghai. The Mall Jinqiao featured the first IMAX theatre in the Jinqiao area and imported goods store G-Super of Greenland Direct Global Goods.
In Q3, a number of stores had their debut along Huaihai Middle Road. Most were mid to high-end sportswear and South Korean fashion brands.
In Q3, prime retail rents in Shanghai increased slightly by 0.2% quarter on quarter (Q-o-Q) to RMB55.7 per sqm per day. (See Table 1)
In the en-bloc sales market, Keppel Land China sold Lifehub @ Jinqiao to Chongbang Group for over RMB5 billion.
Looking forward to Q4 2016, the oversupply situation will continue and the overall vacancy rate will remain at a relatively high level.
In Q4, new retail supply will remain at a high level. New shopping malls to open include Shanghai Tower (40,000 sqm), Vivo City (120,000 sqm), RHTD Hall of Moon (70,320 sqm), ID Mall (26,800 sqm) and Vanke Qibao Project (146,000 sqm).
Some new malls will be within Inner Ring Road. Due to the significant amount of new supply and increasing vacant retail space amidst retail malls’ renovation, we expect retail rents in prime areas to decrease slightly by 1% Q-o-Q in Q4.
In the coming year, we remain optimistic about the Shanghai retail market and expect rents of shopping centres in prime areas to rise by 3–5%, while the vacancy rate will stay at around 10%.