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Chengdu reshapes high-end retail property
By Cherry Cao |
June 6, 2013, Thursday
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Print Edition
Print Edition
THE retail landscape in Chengdu is being redefined amid an explosion of new shopping malls, with more than 3 million square meters of retail space scheduled to come on line in the next three years.
This year alone, four up-market projects in close proximity to Chunxi Road are opening, according to Savills China, an international real estate services provider.
The majority of new retail outlets reflect a trend toward large, mixed-use developments in rather decentralized locations. Some of them, like Longfor's Paradise Walk, are on scales as high as 500,000 square meters.
"As the number of mid- to high-end shopping malls continues to rise in Chengdu, the local retail scene is rapidly catching up with that of first-tier cities," said Dave Law, head of western China research at Savills. "While the surge in new supply will pose a significant challenge to the health of the retail market, Chengdu should somehow be able to cope with oversupply due to its great potential for retail growth."
Excluding projects in decentralized areas, new supply of retail stock totaling 396,000 square meters is expected this year and 259,600 square meters should come on line in 2014, according to Savills.
In the first quarter of 2013, Silver Square shopping mall opened with 24,000 square meters of retail space. Like most shopping arcades, it is competing with traditional department stores.
Primary retail rents keep heading higher. They increased 0.9 percent in the first quarter from the previous quarter to an average 27.5 yuan (US$4.40) per square meter per day. On the secondary retail market, rents rose 2.1 percent to 13.4 yuan per square meter per day.
First-floor shopping mall rents, meanwhile, climbed 1.8 percent to 16.4 yuan per square meter per day, reflecting robust demand for higher quality malls.
Citywide, the prime shopping mall vacancy rate shed 0.7 percentage point to 10.1 percent in the first quarter amid repositioning and stabilizing tenant-mix adjustments.
Vacancy rates in primary retail areas increased by 2 percentage points, mainly reflecting the addition of Silver Square. In the secondary retail market, they dipped by 0.9 percentage point, according to Savills.
This year alone, four up-market projects in close proximity to Chunxi Road are opening, according to Savills China, an international real estate services provider.
The majority of new retail outlets reflect a trend toward large, mixed-use developments in rather decentralized locations. Some of them, like Longfor's Paradise Walk, are on scales as high as 500,000 square meters.
"As the number of mid- to high-end shopping malls continues to rise in Chengdu, the local retail scene is rapidly catching up with that of first-tier cities," said Dave Law, head of western China research at Savills. "While the surge in new supply will pose a significant challenge to the health of the retail market, Chengdu should somehow be able to cope with oversupply due to its great potential for retail growth."
Excluding projects in decentralized areas, new supply of retail stock totaling 396,000 square meters is expected this year and 259,600 square meters should come on line in 2014, according to Savills.
In the first quarter of 2013, Silver Square shopping mall opened with 24,000 square meters of retail space. Like most shopping arcades, it is competing with traditional department stores.
Primary retail rents keep heading higher. They increased 0.9 percent in the first quarter from the previous quarter to an average 27.5 yuan (US$4.40) per square meter per day. On the secondary retail market, rents rose 2.1 percent to 13.4 yuan per square meter per day.
First-floor shopping mall rents, meanwhile, climbed 1.8 percent to 16.4 yuan per square meter per day, reflecting robust demand for higher quality malls.
Citywide, the prime shopping mall vacancy rate shed 0.7 percentage point to 10.1 percent in the first quarter amid repositioning and stabilizing tenant-mix adjustments.
Vacancy rates in primary retail areas increased by 2 percentage points, mainly reflecting the addition of Silver Square. In the secondary retail market, they dipped by 0.9 percentage point, according to Savills.
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