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MARKETIN
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Savills Research
Retail Wuhan – October 2020
Cosmetic brands gain momentumThe decline in rents has narrowed, but the downward trend remains.
Savills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
Thomas NgManaging DirectorWuhan+8627 5935 [email protected]
CENTRAL MANAGEMENT
James MacdonaldSenior DirectorChina+8621 6391 [email protected]
RESEARCH
Please contact us for further information
Savills team
“ The Wuhan retail market was still adjusting in Q3/2020. The withdrawal boom accelerated brand innovation and the market reshuffle, but it was difficult to fill vacant spaces in such a short time. Landlords are faced with new challenges in maintaining stability in the post-epidemic era.” JAMES MACDONALD, SAVILLS RESEARCH
• No new supply came to the market in Q3/2020. With the reopening of the Zhongxin Department Store, the citywide retail stock increased to 6.38 million sq m.
• Cosmetic and new energy vehicle brands drove market momentum. Several of these types of brands opened new stores or debuted in Wuhan.
• Brands in all sectors were still undergoing a period of adjustment, and the withdrawal boom continued. By the end of Q3/2020, the citywide vacancy rate rose 0.9 of a percentage point (ppt) to 7.7%. Among which, emerging submarkets suffered the most significant rise of 1.3 ppts quarter-on-quarter (QoQ) in vacancy rate.
• By the end of Q3/2020, the average first-floor rent dropped to RMB287.4 per sq m per month, down 2.8% QoQ, a narrower decline than last quarter.
• In Q4/2020, Wuhan retail market will witness the delivery of K11 Art Mall (II), Wanda Plaza (Dongxihu) and Jinyinhu 199 More.
• K11 Art Mall, the second K11 in Wuhan, will open in stages. K11 Art Mall (II), will launch first, which has been refurbished from the old New World Department Store
(Zhongxin), and the project is targeting Generation Z customers.
• Both Wanda Plaza (Dongxihu) and Jinyinhu 199 More are located in emerging areas. The new deliveries will enhance the business atmosphere in Dongxihu District and bring new vitality to the area.
Yingbo HuangSenior DirectorWuhan+8627 5935 [email protected]
RETAIL
Ashley QianSenior ManagerWuhan+8627 5935 [email protected]
2savills.com.cn/research
SUPPLY AND DEMANDNo new supply came to the market in Q3/2020. Jianghan Pedestrian Road was upgraded and opened for trial service at the end of quarter, and AEON Mall (Jinyintan) upgraded part of its parking lot into F&B retail to enrich its brand mix. By the end of the quarter, the citywide retail stock increased to 6.38 million sq m, and operation times had returned to normal.
In Q3/2020, international and domestic cosmetic brands maintained their momentum and expanded. Gucci Beauty opened its first store in Central China in Wushang Plaza. Perfect Diary opened stores in Wanda Plaza (Lingjiaohu), Star City, IKEA LIVAT, AEON Mall (Jingkai), AEON Mall (Jinyintan) and AEON Mall (Jinqiao), continuing its expansion in Hankou, Wuchang and Hanyang. Cosmetic collection store Wow Colour opened in CapitaMall Wusheng and is expected to open in Han Street and Poly International Plaza.
New retail brands were also active during Q3/2020, and new energy vehicle brands performed well. Tesla and Bentley both opened exhibition halls in Horizon (South). Xpeng opened new stores in Hanjie Wanda Plaza and Wanda Plaza (Lingjiaohu) while NIO and Weltmeister opened new stores in Optics Valley World Plaza Shopping Centre.
The F&B sector underwent a period of adjustment, with new brands debuting and popular tea brands upgrading their stores. %Arabica launched its debut store in central China in Wuhan Tiandi. Sexy Tea continued to expand in Wuhan and plans to open new stores in AEON Mall (Jinqiao), AEON Mall
(Jinyintan) and Taiheli. Starbucks Now and Bla Bla Bar opened their first stores in Zhongxin Department Store and Han Street, respectively.
VACANCY RATES AND RENTSCitywide shopping malls had returned to normal operation times, and passenger flow had recovered, but brands in all sectors were still in periods of adjustment in Q3/2020. The withdrawal boom continued, and vacant spaces were difficult to fill in such a short time. By the end of Q3/2020, citywide vacancy rate rose 0.9 of a ppt to 7.7%. The vacancy rate of emerging areas rose significantly with an increase of 1.3 ppts QoQ.
Landlords continued to reduce rent expectations due to the continued influence of COVID-19. By the end of Q3/2020, the average first-floor rent dropped to RMB287.4 per sq per m per month, down 2.8% QoQ, a narrower decline than last quarter. The rent of prime, secondary and emerging areas fell 3.6%, 2.3% and 3%, respectively.
MARKET OUTLOOKLooking forward to Q4/2020, Wuhan’s retail market will witness the delivery of K11 Art Mall (II), Wanda Plaza (Dongxihu) and Jinyinhu 199 More. Among them, K11 Art Mall, the second K11 in Wuhan, will open in stages. K11 Art Mall (II), which is aimed at Generation Z consumers will open first. Both Wanda Plaza (Dongxihu) and Jinyinhu 199 More are located in emerging areas. Their launch will enhance the business atmosphere in Dongxihu District and bring a new vitality to the area.
Source Savills Research
GRAPH 1: Retail Supply, 2015 to Q3/2020
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2015 2016 2017 2018 2019 Q1-Q3/2020
sq m
GRAPH 2: Submarket Vacancy Rates, Q4/2015 to Q3/2020
Source Savills Research
0%
5%
10%
15%
20%
25%
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
2015 2016 2017 2018 2019 2020
Citywide Jianghan RoadXudong Hankou RiversideWuhan Square Optics ValleyZhongnan-Zhongbei Road WangjiawanJiedaokou Qingshan
Source Savills Research
GRAPH 3: Submarket Rental Indices, Q4/2015 to Q3/2020
Source Savills Research
50
60
70
80
90
100
110
120
130
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
Q4 Q1
Q2
Q3
2015 2016 2017 2018 2019 2020
Q1/
20
14=
100
Citywide Jianghan RoadXudong Hankou RiversideWuhan Square Optics ValleyZhongnan-Zhongbei Road WangjiawanJiedaokou Qingshan
Note Calculation of rental indices for all submarkets starts from Q1/2014
Retail
PROJECTRETAIL GFA
(SQ M)TYPE AREA
K11 Art Mall (II) 42,000 Shopping mall Wuguang
Wanda Plaza (Dongxihu) 100,000 Shopping mall Dongxihu
Jinyinhu 199 More 48,000 Shopping mall Dongxihu
TABLE 1: Upcoming Retail Projects, Q4/2020
