This is a landmark year for the Shanghai retail market and the completion of a record number of new projects is expected. As of 3Q13, 900,000 sqm of new retail supply has already been delivered to the market. Most of these newly-opened projects are very sophisticated and cater to modern consumers with discerning tastes for lifestyle and household products. The new openings also feature a number of interesting stores making their first appearance in Shanghai. We are optimistic about the potential for these new shopping malls to be competitive because of their smart use of new brands and their interesting designs and themes. Here are some details about the major new retail projects in Shanghai this year:

• iapm (120,000 sqm): This mid- to high-end project developed by Sun Hung Kai opened in early August. Apart from the regular luxury brands, such as Hermès, Prada and Gucci, the project also introduced popular stores from Hong Kong for the very first time, including the restaurant Tao Square and fashion collection store The Stairs. The name fuses together “am” and “pm” to accentuate its “late night” business model which has already proven successful in Hong Kong. The late night concept means that many of the stores will be open until midnight or later. Currently, most shopping malls in Shanghai close at 10 pm. While the details are still being finalised, some restaurants in the mall have already adopted the new timeframe. The extension of business hours is likely to attract “night owls” and work staff from surrounding office buildings – groups that are currently underserved.
• Global Harbor (320,000 sqm): Located in Putuo District, this mall held its grand opening in early July. The Yuexing Group, a domestic furniture company with no previous retail development experience developed the project. Given this lack of experience, the mall’s 73% commitment rate and wide selection of international brands upon opening is impressive. The building’s architecture features a rococo style, which is quite different from most other shopping malls in Shanghai. The mall’s massive size, building style and advertising and media blitz all contributed to its high foot traffic in the first three days of operation. This was an encouraging start, and we will continue to monitor the operational ability of this “freshman” player, in particular with regard to maintenance, where there appears to have been some issues recently with broken floor tiles and untidy bathrooms.
• K11 (35,000 sqm): K11 had its soft opening in April. The mall is in the podium of the Hong Kong New World Tower, which was closed in early 2011 for refurbishment. The new mall seeks to differentiate itself by combining retail space with artistic elements. Apart from regular art shows in the basement, there is an “Urban Harvest” restaurant area on the third floor, which displays an indoor vegetable field, a farm-style fence and live piglets.
• Lane Crawford (15,000 sqm): Lane Crawford opened its Shanghai flagship store in Shanghai Times Square in October after quitting the city seven years ago because of the immature retail market and low brand awareness. After seven years of development, the retail market and consumer base have changed quite a lot, and the market is now ready to accept such niche luxury brands.

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