APPD Market Report Article

Beijing

February 28, 2022

-4.3%

RMB 795

Rents
Stable

F&B brands remain a major demand driver

  • F&B accounted for more than 40% of newly opened retail space in the quarter, remaining the largest contributor to leasing demand. Themed restaurants actively expanded, taking up large units. Among them, Hollywood-themed restaurant Kitty & Daniel opened two new stores. Meanwhile, driven by investment funding, Chinese pastry brands expanded quickly as they grew in popularity among young customers.
  • Domestic fashion brands such as Li-Ning also expanded in the quarter, releasing new brands such as Li-Ning 1990, after reporting strong sales growth. Meanwhile, popular sports brands such as Fila continued to open new stores.

Taikoo Li West opens among four newly opened projects

  • Four new projects opened in the quarter, including the CBD Core Area’s first retail property. CP Center entered the market, expecting to tap into demand from a huge number of working professionals nearby. Offering many affordable F&B brands, the mall is predicted to fill a gap in consumer needs, as the area is considered to be lacking sufficient retail offerings for white-collar workers.
  • As an extension to the successful Taikoo Li South and North sections, Taikoo Li West opened in November with a number of lifestyle and entertainment brands, complementing the existing complex. Meanwhile, multiple brands relocated from the South section, providing space for more niche and fashionable brands to further differentiate the mall and upgrade its positioning.

Urban rent decline stops as vacancy rate drops further

  • As Urban vacancy level has already returned to pre-covid level, many landlords no longer offered rental concessions. Core market outperformed expectations with an increasing number of top-performing projects further raising rents following strong sales performances.
  • In the quarter, Urban rent growth remained flat at -0.1% q-o-q, while Core rent growth continued to inch up by 0.4% q-o-q. Meanwhile, with Suburban vacancy pressure largely alleviated by year-end, the rate dropped by 3.0 ppts y-o-y at end-2021. Suburban rental declines decelerated further, registering -0.5% q-o-q growth in the quarter.

Outlook: Upcoming Winter Olympics to promote winter sports brands

  • The approaching Winter Olympics is expected to drive consumption for winter sports-related retail. As such, winter sports clothing and equipment brands are taking advantage of the games to expand their presence in the market and appeal to local consumers. Ahead of the opening ceremony, skating brand Snow 51 expanded at China World Mall and Beijing APM.
  • Supply levels in the Suburban and Urban markets are expected to peak in 2022. Urban supply will be driven by previously delayed projects, while a steady streamline of long-awaited projects in suburban Tongzhou and Daxing are also set to open over the coming months, and are expected to further boost the Suburban retail market.

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

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