APPD Market Report Article


May 31, 2022


RMB 797


Gastropub chains expand, driven by investments

  • Gastropubs were active, expanding after receiving investments. Popular chain, Commune, raised hundreds of millions of RMB in January and opened its third location in Beijing at Taikoo Li South with plans for 120-130 stores nationwide for 2022. Focusing on nightlife, gastropubs increase shopping mall sales by extending operation hours and drawing customers with higher spending power.
  • Domestic gold jewellery showed strong performance after reporting robust sales growth, accounting for over 8% of total opened stores in the quarter. For example, Laomiao Gold opened four new stores in the quarter. Landlords showed growing interest in domestic gold jewellery brands as they have higher rent affordability and improve overall positioning of first floors.

Dong’An Market at Wangfujing reopens after renovation

  • Dong’An Market, the 11,000-sqm store operated by Luxeporium, reopened as a handmade-fashion store, featuring nearly 600 brands, including niche and premium brands. With a higher positioning, the renovated project targets local customers rather than tourists. Furthermore, Metro Line 8 with a station on the North of Wangfujing Street came online last year and is expected to attract local customers.
  • Shopping malls introduced indoor markets in a bid to improve performance. As customers focus more on the shopping experience, indoor street markets with different themes bring immersive shopping experiences, further differentiating themselves. In the quarter, dual-floor indoor market Bla Bla Street opened at Livat, with a mix of F&B and entertainment tenants, such as K22 Yogurt and HKR Gaming.

Slower retail sales recovery at end-2021 pressures rent increases

  • Urban rents remained largely stable; many landlords failed to raise rents in 1Q22 as previously planned. As retail sales growth and demand recovery were both below expectations, many regional malls found it difficult to raise rents. As a result, urban rent growth remained flat at 0.3% q-o-q. Meanwhile, core rent growth increased by 0.6% q-o-q, driven by top destination malls.
  • Due to resurgence of COVID-19 cases in the suburban market, some suburban projects witnessed further closures and withdrawals, from F&B to children’s entertainment retailers. Suburban vacancy level slightly increased to 6.5%, while suburban rent recorded -0.4% growth in the quarter.

Outlook: Shopping seasons to promote offline consumption

  • Beijing encourages offline spending by promoting shopping seasons via monetary support to shopping malls, retailers and F&B brands, while giving customers shopping vouchers. Meanwhile, as Beijing further promotes its progress towards developing as an ‘International Consumption Center City’, the city is expected to attract more brands to introduce first stores, especially fashion and F&B brands.
  • The suburban market expects substantial future supply in 2022. Multiple long-awaited projects in Daxing and Tongzhou are set to enter the market this year, pending further delays. Meanwhile, several regional malls by experienced developers are scheduled to open, such as Shijingshan Joy City and Yizhuang Paradise Walk.

Note: Beijing Retail refers to Beijing's Urban retail market.

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