Economic recovery and consumption upgrading helped China’s consumer market maintain its rapid pace development in 2017 while most consumers remain optimistic. Offline retail regains traction while omni-channel retail booms. The integration of online and offline retail has now entered a stage of in-depth implementation, in which numerous new concepts and business models are being utilised.
Shopping centre landlords face a number of major opportunities and challenges in the coming years. On one hand, economic stability, increasing incomes and premiumisation have created a strong foundation for the rise of new property types, business models and platforms. This has injected more liveliness into the market while also allowing operators to accumulate relevant experience. On the other hand, such rapid changes will create an influx of short term supply which will lead to market imbalances. The challenges posed by shopping centre oversupply will thus continue to exist. Based on these observations, appointed by the Ministry of Commerce, the China Chain Store & Franchise Association (CCFA) and CBRE have once again jointly issued its “China Shopping Centre Development Index (2017 Annual Report)” as a periodic point of reference for localities and stakeholders to review when formulating relevant plans and strategies.
- Current market performance and forecasts remain optimistic;
- Sales growth and rental income perform well in 2017, with 93% of shopping centres recorded increases in these two indicators;
- Cost pressures remain with investment in big data and new technologies being one of the main constituents of operations expenditure;
- Market advantages ensure tier I cities enjoy strong leasing activity. Major tier II cities such as Chengdu, Hangzhou, Nanjing, Chongqing and Xi’an boost the overall tier II market;
- Outlets continue to outperform, whereas leasing activity in regional retail formats declines.