Core Insights - The retail market in China is under pressure, with approximately 40% of retail companies facing challenges in revenue growth during the first four months of 2024 [1][2] - Shanghai and Chengdu have notably high vacancy rates of 8.5% and 8.3%, respectively, indicating a struggle in the retail sector [2][3] - The report highlights a complex market environment for retail, driven by insufficient consumer demand and a slow economic recovery, leading to a trend of price competition [2][3] Market Analysis - The report focuses on shopping centers, analyzing various factors such as project positioning, rental income, turnover, occupancy rates, tenant composition, and customer flow [2] - Despite a slight decrease in overall vacancy rates in core commercial markets, rental prices are declining, reflecting the economic challenges and uncertainty affecting retail and dining performance [3] - The first quarter of 2024 saw 71 major commercial real estate transactions in China, totaling 448 billion yuan, with office properties being the most favored [4] Company Performance - Approximately 60% of sample retail companies reported year-on-year revenue growth, although most of this growth was below 10%, with about 40% experiencing slight declines [5] - New business directions are being explored by companies, with a focus on inventory and non-standard offerings as potential growth areas [5] - The report notes that the leasing activity in the restaurant sector has been particularly vibrant, with a trend towards integrating popular dining concepts in mid-range shopping centers [5] Investment Trends - Since 2024, eight consumer infrastructure REITs have emerged in the C-REITS market, covering various asset types including shopping centers and supermarkets, with occupancy rates above 95% [6] - Notably, the highest occupancy rate recorded was 99.17% for Wuhan's first creative outlet, while Shanghai's Bai Lian You Yi City had the lowest at over 95% [6]

Core Viewpoint - Hangzhou is experiencing a paradox where it has high per capita consumption but relatively low total retail sales, indicating that residents earn money but spend it elsewhere [1][3][9]. Retail Sales and Consumption Data - In Q1 2024, Hangzhou's total retail sales reached 207.5 billion yuan, a year-on-year increase of 6.3%, ranking it tenth among major cities in China [2]. - In 2024, Hangzhou's per capita consumption expenditure was 52,996 yuan, surpassing Shanghai and making it the city with the highest per capita consumption in the country [3][7]. Reasons for Consumption Discrepancy - Hangzhou's residents have a lower consumption willingness compared to other regions, with high-end consumption often flowing to Shanghai [3][9]. - The city lacks sufficient high-end consumption venues, which contributes to the disparity between high per capita consumption and lower total retail sales [9]. Future Consumption Strategies - Experts suggest that Hangzhou should leverage its strengths in digital economy and artificial intelligence to attract young consumers and enhance local consumption potential [3][10]. - The city aims to become an international consumption center by 2027, targeting a total retail sales figure of 900 billion yuan and aligning growth with GDP [9][10]. Urban Renewal and Commercial Revitalization - Hangzhou is actively promoting the renovation of commercial districts, integrating elements that appeal to younger consumers, such as digital and two-dimensional culture [4][11]. - The city is focusing on creating a vibrant shopping environment, with initiatives to enhance the consumer experience and attract more visitors [16]. Emerging Consumption Trends - Recent developments in Hangzhou's retail market include the rise of new business models and themed stores, particularly in the two-dimensional culture sector [11][12]. - Events and exhibitions related to popular culture are being organized to engage consumers and enhance the shopping experience [12][14].

Office Market - In Q1 2025, Shenzhen's premium office market saw a substantial supply of 302,000 square meters, with a significant year-on-year increase in net absorption by 44.4%, marking the highest demand for the first quarter since 2022 [12][19] - The overall vacancy rate slightly increased by 0.1 percentage points to 22.3%, driven by strong demand from the technology sector, particularly in smart IoT and AI [12][10] - Average rent decreased by 3.6% to RMB 158.3 per square meter per month, influenced by supply expansion and cost-cutting measures from tenants [14][19] Retail Market - No new supply was recorded in Q1 2025, leading to a slight decrease in the overall vacancy rate to 3.7% [23] - The restaurant sector emerged as the primary demand driver, with a demand share of 44%, while retail demand remained stable, particularly in apparel and jewelry [24][25] - Average rent in the retail sector fell by 0.4% to RMB 18.4 per square meter per day, with varying performance across different segments [28][25] Logistics Market - The logistics market in Shenzhen experienced no new supply in Q1 2025, resulting in a vacancy rate of 6.3% [31] - Demand primarily came from third-party logistics and electronic manufacturing, with rental growth slowing down due to reduced export volumes [31][41] - Average rent increased slightly by 0.4% to RMB 49.0 per square meter per month, but future supply pressures are expected to impact vacancy rates [31][41] Investment Market - In Q1 2025, Shenzhen's commercial real estate market completed three transactions totaling RMB 7.04 billion, with office properties accounting for 94% of the transactions [44] - The buyer profile was predominantly banks, focusing on self-use, while the capitalized rates for office and retail properties continued to expand slightly [44][46] - The market is expected to attract investors due to the bottoming out of prices for office and commercial properties, with a focus on core area quality assets and REITs [46]