7 Chinese cities top the 10 most active global shopping mall development markets

CBRE publishes report: Global Shopping Center Development

Shanghai, May 4th – CBRE’s annual study of global retail development found that builders completed 12.5 million sq. m. of shopping centers globally last year, up 11.4% from 2015. China once again registered the globe’s highest total annual completions, amounting to 5.75 million sq. m. Seven Chinese cities, including Shanghai, Beijing, Chongqing, Chengdu, Nanjing, Shenzhen and Tianjin, made it onto the top 10 most active global markets list.

 

Source: CBRE Research, Q4 2016

Construction activity overall has slowed amidst a more cautious approach by investors and occupiers. The global pipeline of retail centers under construction declined by 22% y-o-y to 33.5 million sq. m. China remains the global hotspot for retail construction, registering a whopping19.7 million sq. m. of space under construction—60% of the global total. Eight Chinese cities were listed on the top 10 markets for shopping center pipeline under construction, with Shenzhen and Shanghai occupying the top two spots.

 

Source: CBRE Research, Q4 2016

In the beginning of this year, CBRE’s report “Greater China Real Estate Market Outlook”, predicts that China’s 17 major retail markets are anticipating the total volume of new supply to reach 8 million sq. m in 2017. 

Shanghai will see stable rental growth as the retail pipeline is well-distributed across several submarkets, with good residential catchments. In Shenzhen, the majority pipeline concentrates in non-core submarkets, so rental performance may differ among different projects amidst tough competition. Ample pipelines in tier-two cities will continue to put rents in these areas under pressure. However, Chengdu, Nanjing and Hangzhou will face less risky leasing conditions due to stronger brand expansion. 

Rebecca Tibbott,Head of Advisory & Transaction Services - Retail, CBRE China, said, “ The core and mature non-core retail submarkets in Beijing and Shanghai continue to be the top destinations for entrance and expansion of retail brands. At the same time, retailors have also become aware that establishing presence in densely populated lower-tier cities is a key step to achieving Chinese market penetration. However, rapid rise in shopping center development and construction activity have led to less-satisfying pre-leasing results. 

Riding on the strong consumer demand for experience retail, shopping centers are placing increased focus on overall shopping experience to stand out from the intensified competition. More shopping centers are looking to diversify their tenant mix through incorporating experiencing-enhancing brands encompassing cooking, sports, rooftop space, co-working space, health care etc., generating new demand and creating new growth drivers for future growth.”​​​​​