INNOVATION DRIVES FASHION FORWARD

Latest Data and Highlights on Seven High-end Commercial Real Estate Corporations in China

April 13,2022

According to the China Luxury Report 2021 issued by Bain & Company in January, the sales of China’s personal luxury goods market still maintained a fast double-digit growth. It was estimated to increase by 36% to 471 billion yuan in 2021, nearly a 100% growth compared to pre-pandemic levels in 2019. China is expected to become the largest luxury market around the globe in 2025. Premium commercial real estate is a significant scenario and indicator of fashion and luxury goods retail in a city.

This article will explain the operations of seven commercial real estate developers and their respective projects on high-end shopping malls in 2021 according to issued financial statements and data collected by third-party institutes. These developers include China Resources Holdings Company Limited (CRC), Hang Lung Group (Hang Lung), The Wharf (Holdings) Limited (The Wharf), Swire Properties Limited (Swire), Shui On Land Limited (Shui On), Beijing Hualian Group Investment Holding Co., Ltd. (Hualian) and Deji Properties Limited (Deji).

The following is a table on the rental incomes and retail sales of high-end shopping malls owned by the abovementioned developers in Mainland China in 2021 (n/a stands for undisclosed information):

——CRC ——

On March 31, CRC-owned real estate company China Resources Land Ltd., (HK:01109) revealed its annual performance report by December 31, 2021. Retail sales of its shopping malls have increased by 45% year-on-year to 107.2 billion yuan, with a 97% occupancy rate. Its rental incomes reached 13.9 billion yuan, a 38.1% year-on-year increase that far exceeded market average.

In 2021, 9 shopping malls of China Resources Land Ltd., opened their doors on schedule and the company launched 12 new shopping mall projects. By the end of 2021, there were in total 54 The MixC malls in operation and about 61 back-up projects.

Among them, The MixC Shenzhen achieved annual sales of 13 billion yuan, up 30% year-on-year. It housed 33 new initial stores of various brands. In May 2021, The MixC Ningbo was launched and it hauled in 1.2 billion yuan in sales within half year. In September, 40% of the 40 brands introduced into the second phase of The MixC Qingdao entered Qingdao City, Shandong Province for the first time; In the same month, The MixC Shantou opened and over 50% of the 430 brands there entered Shantou City, Guangdong Province for the first time. They included Cartier, IWC, PANERAI, MONTBLANC, Dior, Chanel, just to name a few.

The MixC Wuhan is set to open on May 1 this year as the first commercial complex that China Resources Land Ltd., launches in Wuhan. Currently, nearly 400 commercial tenants have signed the rental contract, which account for over 90% of planned total. It is the first time for 40% of those brands to set up stores in Wuhan. The MixC Fuzhou and The MixC Haikou are estimated to open for business this June.

—— Hang Lung ——

During FY 2021, real estate company Hang Lung Properties (HK:00101) owned by the Hang Lung Group earned 10.321 billion HKD in revenue, up by 15% year-of-year. Its rental incomes of 10 shopping malls in Mainland China reached 4.662 billion yuan, a 25% increase year-on-year and that of premium malls increased by 30%; secondary ones by 2%.

Hang Lung Properties stated that the retail market of high-end products remained stable and promising and all premium shopping malls achieved a double-digit growth. Tenants achieved 33% to 89% growth in sales year-on-year. In the second half of 2021, the total sales of tenants of premium shopping malls increased by 21% year-on-year.

Secondary ones’ performance remained the same compared to last year, with a 2% growth year-on-year, which reflected how the COVID-19 pandemic had different impacts on various businesses.

—— The Wharf ——

The Wharf (Holdings) Limited (HK:00004) has invested in properties in Mainland China, such as Changsha IFS, Chengdu IFS, Chongqing IFS, Wuxi IFS, Wheelock Square, Times Square and so on. According to the group, thanks to the strong earnings of Chengdu IFS and Changsha IFS, during FY2021, the incomes of invested properties in mainland China by the group reached 5.366 billion HKD, a 28% rise year-on-year; the operating profit reached 3.529 billion HKD, up 37% year-on-year.

According to United Business Network, Changsha IFS saw 9 billion yuan in sales and Chengdu IFS hauled in nearly 10 billion yuan, breaking the record of sales set by high-end shopping centers in Southwest China.

In September 2021, luxury hotel Park Hyatt announced that it would settle in Changsha IFS, and the hotel would open for business in 2023; Niccolo Chengdu Hotel in Chengdu IFS has become a market leader in terms of occupancy rate and revenue since its launch in 2015. In the second quarter of 2021, it broke the record of revenue with an occupancy rate as high as 91%.

—— Swire Properties Limited ——

On March 10, Swire Properties Limited released its annual performance by December 31, 2021. Retail sales of Taikoo Li Sanlitun, TaiKoo Hui Guangzhou, INDIGO Beijing, Sino-Ocean Taikoo Li Chengdu and HKRI Taikoo Hui increased by 27%33%11%22%29%, respectively.

In September 2021, the group’s second development project in Shanghai and the third Taikoo Li project in mainland China, Taikoo Li Qiantan opened for business; In December, Taikoo Li Sanlitun West was launched in Beijing; In March 2022, the group revealed its plan to develop Taikoo Li project in Xi’an.

—— Shui On ——

Shui On Land Limited is a real estate company set up by the Shui On Group in mainland China, and Shui On Xintiandi is an independent subsidiary wholly owned by Shui On Land Limited. By December 31, 2021, its net asset value has exceeded 33 billion yuan.

According to its official account, Shui On Land Limited hauled in 2.915 billion yuan in rental income and other incomes from its commercial property portfolio, up 29% year-on-year; the average occupancy rate of the portfolio reached 93%.

In September 2021, another commercial project of the group, Rui Hong Xintiandi Hall of the Sun, was launched in Shanghai's large-scale residential community, Rui Hong Xin Cheng with a retail GFA of 185,000 square meters. Shui On Land Limited claimed that it would continue to focus on first-tier and robust second-tier cities with greater potential in the Yangtze River Delta and the Greater Bay Area.

——Hualian ——

Beijing SKP opened in 2007 and in 2018 Xi’an SKP was launched. According to United Business Network, in 2021, Beijing SKP saw 24 billion yuan in sales, a 35% year-on-year growth; Xi’an SKP earned 8 billion yuan in sales, up 38% year-on-year.

In December 2021, the second SKP-S worldwide opened in Xi’an. Hangzhou SKP project began construction in the same month and it would become the first premium commercial complex south to the Qiantang River upon completion. The planned investment of SKP is set at 16 billion yuan. The sixth SKP mall will be situated in Huhhot; Chengdu SKP has topped out during 2021 Spring Festival. The project is due for completion in June 2022 and will open its doors in the fourth quarter of 2022.

—— Deji ——

Deji Plaza is the only high-end comprehensive single-building commercial complex developed by local developer Deji Properties in Nanjing. According to the data released by official media of the Nanjing Municipal Government, in 2021, the annual sales of Deji Plaza surpassed 20 billion yuan for the first time, achieving a 30% year-on-year increase compared to 15.6 billion yuan in sales in 2020.

In 2021, Deji Plaza made several rounds of adjustments on brands settled in the mall. Currently, there are over 400 brands there.

| Photo Credit: CRC, SKP, PLAZA 66, Taikoo Li

| Writer: Yang Zhang

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