Share
SHANGHAI: Overall rents of well-located retail projects in Shanghai, China are expected to edge up in 2H2010 led by the continued growth of rentals in prime retail areas, said Colliers International in its Shanghai Knowledge Report on the Retail Property Market for the first half of 2010 (1H2010).
Colliers said robust consumption boosted by the Shanghai World Expo, along with efforts of well-known brands to get a foothold in key prime areas, would support the rental growth in the city centre.
It said the rise in the number of tourists during the Expo supported the rental growth in prime areas, resulting in the rental climbing to 43.70 yuan (RM20.57) per sq m per day, up 7.5% over the past half year.
Rental rates in prime areas are expected to rise further following the repositioning of a number of key retail projects. "Overall, the average rental rates for the entire market are likely to edge up approximately 5%, with a rise of more than 10% in prime areas," it said, adding that the retail sector's performance remained strong in 1H2010 with total retail sales increasing by 15.2% year-on-year in May.
"Meanwhile, rental rates in emerging areas continued to stay firm, while a drop in rental rates took place in traditional downtown areas. On the sales front, the Shanghai retail property sales market remained active with several en-bloc transactions including Infiniti on Huaihai Road, the mixed-use project Rose Plaza (42% retail) on Sichuan Road North, and Xinmei Taigu Square closing in 1H10," it said.
Due to a significant new supply across the city in 1H2010, the overall vacancy rate climbed to 12.4%. However, the vacancy rate in prime areas registered a noticeable decline to 7.0%, down 3.5 percentage points
"Emerging areas also performed well supported by robust consumption from community residents. The vacancy rate dropped to a historical low in this market segment at 2.8%. In contrast, new projects in the traditional downtown areas were the primary driver in the overall market vacancy increase," the report said.
The staging of the Expo has led to some retail project to postpone their pre-leasing, with over 200,000 sq m of retailing space expected to enter the market in the 2H of this year.
The majority of the new supply would be located in non-prime traditional downtown areas while the prime area is expected to see very little new supply prior to the end of 2010.
The report suggested that the overall retail vacancy rate is expected to edge up to approximately 15% by the end of 2010, but vacancy rates in prime areas will decline further.
Meanwhile, the Expo has acted as a catalyst for brands to expand or strengthen their footholds in the Shanghai prime retail areas as in 1H2010 several luxury brands strengthened their presence in Shanghai after the repositioning of Hong Kong Plaza and Lippo Plaza on Huaihai Road Central.
Apple will be opening up two retail stores, one in Hong Kong Plaza on Huaihai Central Road and one in Henderson Metropolitan located on Nanjing East Road. Marks & Spencer has opened its second China location at the newly repositioned Yu Fashion Garden.
"Both Louis Vuitton and Zegna each leased approximately 2,500 sq m in Lippo Plaza, while a number of other brands led by Coach, Tiffany and Cartier opened locations in Hong Kong Plaza. During the same period, many of these same luxury brands also opened stores at Shanghai ifc in Lujiazui," Colliers said.
"Leading fashion brands continued their rapid China expansion in 1H2010. For example, ZARA opened up stores in both Yu Fashion Garden and IMAGO, while UNIQLO opened its China flagship store — with a retail area of 3,500 sq m — on Nanjing Road West.
"Other category killers also continued to expand their footprint across Shanghai. For example, HOLA opened its eighth branch store at Thumb Plaza in Lianyang, Pudong. Meanwhile, Toys 'R' Us entered Wanda Square in Yangpu with a retail space of around 800 sq m," the Colliers report said.
"In line with the opening of the Expo in May, more prime retail properties were launched in 1H2010, including both new and repositioned projects. In Luwan, both Lippo Plaza and Hong Kong Plaza have been repositioned as premium projects," it said.
Collier said that in the Yuyuan area, both the repositioned Yu Fashion Garden (formerly Dragon Gate Mall) and new project M Square commenced operations, bringing nearly 35,700 sq m of new supply into the market.
Colliers said robust consumption boosted by the Shanghai World Expo, along with efforts of well-known brands to get a foothold in key prime areas, would support the rental growth in the city centre.
It said the rise in the number of tourists during the Expo supported the rental growth in prime areas, resulting in the rental climbing to 43.70 yuan (RM20.57) per sq m per day, up 7.5% over the past half year.
Rental rates in prime areas are expected to rise further following the repositioning of a number of key retail projects. "Overall, the average rental rates for the entire market are likely to edge up approximately 5%, with a rise of more than 10% in prime areas," it said, adding that the retail sector's performance remained strong in 1H2010 with total retail sales increasing by 15.2% year-on-year in May.
"Meanwhile, rental rates in emerging areas continued to stay firm, while a drop in rental rates took place in traditional downtown areas. On the sales front, the Shanghai retail property sales market remained active with several en-bloc transactions including Infiniti on Huaihai Road, the mixed-use project Rose Plaza (42% retail) on Sichuan Road North, and Xinmei Taigu Square closing in 1H10," it said.
Due to a significant new supply across the city in 1H2010, the overall vacancy rate climbed to 12.4%. However, the vacancy rate in prime areas registered a noticeable decline to 7.0%, down 3.5 percentage points
"Emerging areas also performed well supported by robust consumption from community residents. The vacancy rate dropped to a historical low in this market segment at 2.8%. In contrast, new projects in the traditional downtown areas were the primary driver in the overall market vacancy increase," the report said.
The staging of the Expo has led to some retail project to postpone their pre-leasing, with over 200,000 sq m of retailing space expected to enter the market in the 2H of this year.
The majority of the new supply would be located in non-prime traditional downtown areas while the prime area is expected to see very little new supply prior to the end of 2010.
The report suggested that the overall retail vacancy rate is expected to edge up to approximately 15% by the end of 2010, but vacancy rates in prime areas will decline further.
Meanwhile, the Expo has acted as a catalyst for brands to expand or strengthen their footholds in the Shanghai prime retail areas as in 1H2010 several luxury brands strengthened their presence in Shanghai after the repositioning of Hong Kong Plaza and Lippo Plaza on Huaihai Road Central.
Apple will be opening up two retail stores, one in Hong Kong Plaza on Huaihai Central Road and one in Henderson Metropolitan located on Nanjing East Road. Marks & Spencer has opened its second China location at the newly repositioned Yu Fashion Garden.
"Both Louis Vuitton and Zegna each leased approximately 2,500 sq m in Lippo Plaza, while a number of other brands led by Coach, Tiffany and Cartier opened locations in Hong Kong Plaza. During the same period, many of these same luxury brands also opened stores at Shanghai ifc in Lujiazui," Colliers said.
"Leading fashion brands continued their rapid China expansion in 1H2010. For example, ZARA opened up stores in both Yu Fashion Garden and IMAGO, while UNIQLO opened its China flagship store — with a retail area of 3,500 sq m — on Nanjing Road West.
"Other category killers also continued to expand their footprint across Shanghai. For example, HOLA opened its eighth branch store at Thumb Plaza in Lianyang, Pudong. Meanwhile, Toys 'R' Us entered Wanda Square in Yangpu with a retail space of around 800 sq m," the Colliers report said.
"In line with the opening of the Expo in May, more prime retail properties were launched in 1H2010, including both new and repositioned projects. In Luwan, both Lippo Plaza and Hong Kong Plaza have been repositioned as premium projects," it said.
Collier said that in the Yuyuan area, both the repositioned Yu Fashion Garden (formerly Dragon Gate Mall) and new project M Square commenced operations, bringing nearly 35,700 sq m of new supply into the market.
SHARE
