Com­mer­cial realty booms in Shang­hai

China Daily (Canada) - - FRONT PAGE - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily.com.cn

Un­like other Chi­nese cities where there are wor­ries of an over­sup­ply in com­mer­cial space, the scene is very much vi­brant in Shang­hai.

Af­ter open­ing West­gate Mall 18 years ago on West Nan­jing Road, Cheung Kong Prop­erty Hold­ings Ltd, owned by Hong Kong busi­ness ty­coon Li Kash­ing, will launch a brand new com­mer­cial pro­ject in the city’s Pudong New Area.

Named Cen­tury Link, the com­mer­cial com­plex con­sists of a 140,000 square-me­ter shop­ping area and twin-tower of­fice build­ings. It is ex­pected to be op­er­a­tional in 2016.

The West­gate Mall be­came a land­mark af­ter it opened, and the same is ex­pected of the new pro­ject in the fu­ture, said Wil­son Yeh, as­sis­tant di­rec­tor and gen­eral man­ager of Shang­hai and Changzhou, Cheung Kong Prop­erty Hold­ings Ltd.

Ac­cord­ing to Yeh, the pro­ject is lo­cated in an in­ter­sec­tion of four metro lines, where a daily pas­sen­ger flow of 300,000 will ben­e­fit the new mall.

On the city’s western side, another com­mer­cial pro­ject Hongqiao Tiandi, or the Hub, de­vel­oped by China Xin­tiandi — a sep­a­rately man­aged and wholly owned sub­sidiary of Shui On Land — will com­mence busi­ness later this year.

With a land area of 62,000 sq m, Hongqiao Tiandi con­sists of a 380,000 sq-m com­mer­cial com­plex, in­clud­ing of­fice space, shop­ping area, restau­rants, en­ter­tain­ment, and recre­ational cen­ter.

The pro­ject will ben­e­fit di­rectly from the more than 1 mil­lion pas­sen­gers that pass through the Hongqiao trans­porta­tion hub.

“More pas­sen­ger flow will be brought by the nearby Na­tional Ex­hi­bi­tion and Con­ven­tion Cen­ter’s year-round ex­hi­bi­tions, as well as the 3 mil­lion res­i­dents liv­ing within 5 kilo­me­ters,” said Thomas Tam, ex­ec­u­tive di­rec­tor of com­mer­cial, China Xin­tiandi.

Shui On Land aims to make the Hub another suc­cess­ful land­mark as its Xin­tiandi in down­town does.

Sup­ply of com­mer­cial prop­er­ties has been in­creas­ing over the past years, and there are no signs of a slow­down in the com­ing year, said Joe Zhou, head of re­search for in­ter­na­tional real es­tate ser­vice provider Jones Lang LaSalle (JLL) East China.

In the past five years, Shang­hai’s of­fice space sup­ply has dou­bled, with another 1.5 mil­lion sq m to be made avail­able within this year. In the next three years, the city’s an­nual re­tail prop­erty sup­ply will be 1 mil­lion sq m.

“The high sup­ply of of­fice vol­ume is con­sumed by the ris­ing de­mand, such as from the de­vel­op­ment of China (Shang­hai) Pi­lot Free Trade Zone, which has be­come an en­gine for re­lated in­dus­trial’s ex­pan­sion in Shang­hai,” said Zhou.

The re­tail sec­tor is more like a ten­ant mar­ket now, which means ten­ants are in a fa­vor­able po­si­tion in de­cid­ing rental lo­ca­tions and prices.

The in­creas­ingly high den­sity of re­tail space makes it more dif­fi­cult for in­ex­pe­ri­enced de­vel­op­ers to sur­vive.

Na­tion­wide, over­sup­ply wor­ries are grow­ing as more Chi­nese shop­ping cen­ters are built.

Net in­crease of com­mer­cial space reached 120 mil­lion sq m in 2014, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics. This is in stark con­trast to China’s “New Nor­mal” of a con­tin­ued de­cel­er­a­tion in over­all mar­ket growth for fast-mov­ing con­sumer goods, ac­cord­ing to the latest re­port from Bain & Co.

Ac­cord­ing to the re­port, growth of fast-mov­ing con­sumer goods mar­ket dropped from nearly 12 per­cent in 2011 and 2012 to 4.4 per­cent dur­ing the first quar­ter of 2015.

An­a­lysts and busi­ness in­sid­ers re­main pos­i­tive about the out­look of Shang­hai’s re­tail sec­tor, es­pe­cially with re­gard to the city’s im­por­tant eco­nomic sta­tus and its ever-strength­en­ing con­sumer abil­ity.

More fo­cus should be given to shop­ping malls’ en­ter­tain­ment func­tion rather than shop­ping func­tion, as it used to be, Zhou sug­gested.

“The Free Trade Zone is only the first step in the city’s great ex­pec­ta­tions of eco­nomic de­vel­op­ment, and we see a lot more fi­nan­cial tal­ents join­ing the city in the near fu­ture, whose great con­sump­tion power can­not be ig­nored,” said Tam.

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