Surge in new properties fails to dent Shanghai retail rental market

PUBLISHED : Wednesday, 25 August, 2010, 12:00am
UPDATED : Wednesday, 25 August, 2010, 12:00am

Shanghai retail property rentals are seeing strong support despite increasing supply as businesses expand their footholds in response to robust consumption, industry sources say.

Retail property rents in the first six months climbed 7.5 per cent to 43.70 yuan (HK$49.90) per square metre per day, spurred by strong demand, according to international property consultant Colliers International. Rental rates in emerging areas remained firm, it said.

Retail-sector performance was strong, with total sales increasing 15.2 per cent year-on-year in May.

'Meanwhile, the staging of the World Expo is acting as a further catalyst for brands to expand or strengthen their footholds in the Shanghai area,' said Colliers.

During the first half, several luxury brands strengthened their Shanghai presence after the repositioning of Hong Kong Plaza and Lippo Plaza on Huaihai Road Central.

Louis Vuitton and Zegna each leased about 2,500 square metres in Lippo Plaza. During the period, many similar brands also opened stores at Shanghai ifc in Lujiazui.

Apart from luxury brands, the retail area is also prized by many other international and local brands.

For example, Nina's Sichuan Restaurant has agreed to an eight-year lease extension, paying 82 per cent above its previous rent at Central Plaza, a 22-level office and retail tower.

Richard David, chief executive of Treasury China Trust, the landlord of the building, said the renewal with higher rents was prompted by the vast retail sales market.

'The retail market in China, particularly in Shanghai, is growing very quickly,' David said.

He said there was an abundant new supply of retail space in Shanghai, but remained confident in the market. According to DTZ, total central city stock in the second quarter reached 1.9 million square metres, and the property consultant expected a further six projects to be completed in the next quarter.

However, DTZ said the World Expo would continue to attract tourists to the city, and retail sales were expected to remain strong,