According to the latest report jointly released by Knight Frank and Holdways, China carried out a series of measures to regulate the residential market and the People’s Bank of China tightened credit in the first half of 2011. With suppressed demand and credit, the transaction volumes of primary and secondary homes declined. Some developers have shifted to the less-intervened retail property sector and have been active in building shopping malls to earn stable rental income. In the first half of the year, the average monthly rent of prime shopping centres in first-tier cities reached RMB1,367.3 per sq m, while that in second-tier cities was RMB940.7 per sq m.
Alongside strong economic development in China, local income and buying power have been on the rise, boosting retail activity and thus the value of retail properties. Robust retail activity has lifted the rents and prices of retail properties. The completions of new, prime shopping malls have encouraged the expansion of high and mid-end international brands to benefit from the growth in China’s vast consumption market.
Mr Thomas Lam Ho Man, Head of Research at Knight Frank in Greater China, says “looking forward, more multinational brands are expected to enter China, while those who have already entered the market will continue to expand. In the second half of the year, we expect China’s retail property rents and prices to continue to surge due to strong retail demand, with Shanghai, Shenzhen and Hangzhou leading the market.”