According to the latest report released by Knight Frank, strong market demand pushed up the monthly rents of level-one shops in the fourth quarter by 3.8% to RMB1,206.3 per sq m in Beijing and 1.0% to RMB1,489.6 per sq m in Shanghai. Knight Frank expects prime retail rents in Beijing and Shanghai to grow about 15% in 2012 and believes commercial properties in China are likely to remain the focus of major investment buyers over the coming years.
In the fourth quarter of 2011, the prime retail market in Beijing grew rapidly as local and international retailers continued to expand. For example, Dior and Marni opened flagship stores in Shinkong Place and Sanlitun Village, respectively.
Shanghai’s retail market continued to witness strong growth in supply and demand during the fourth quarter as more overseas retailers entered the Shanghai market. American clothing brand Hollister opened its first Mainland shop in Raffles City, while Greek accessories retailer Folli Follie and Italian fashion brand ASOBIO both opened flagship stores in Nanjing West Road.
Meanwhile, retail property sales in Guangzhou remained buoyant in the fourth quarter, driving up the supply of for-sale street shops by 3%. The average rent remained stable, but the number of leasing transactions in prime retail areas plunged about 50%, reflecting the slowdown in growth in GDP and retail sales in Guangzhou during the second half of 2011. Investment in commercial properties will remain positive amid the continuation of home-purchase restrictions in 2012. The current robust market will encourage the launch of commercial properties, thus increasing supply. Knight Frank expects Guangzhou’s retail property prices to rise slightly and the total transacted area to remain stable.