Shop rents driven by cashed-up youth
Spending power of fashion-conscious young shoppers draws Hong Kong developers and international retailers to second-tier cities
Shop rents in most mainland cities are expected to increase steadily as retail sales continue to grow on the back of a vast market of young, fashion-conscious shoppers who are willing to spend a significant proportion of their monthly incomes in stores, says property consultancy CBRE.
The trend will not be confined to the first-tier cities, and tier-two cities, which are on the radar of international retailers, are expected to see a steady rise in new entrants to their retail markets.
Retail sales on the mainland last month grew 12.9 per cent year on year, compared with a year-on-year increase of 12.8 per cent increase in April. That's still below the government target of 14.5 per cent for the year.
"The Chinese retail industry is picking up and is expected to become the driving force in China's economic growth ," said Chen Hongfei, director of CBRE research for northern China.
Rising retail spending power would attract local and international retailers to establish their presence, which in turn would support property rents, he said.
In Beijing, the prime retail market has seen steady growth since 2003, and prime retail rents reached 40.8 yuan (HK$51.40) per square metre per day in the first quarter of this year, up by 2.6 per cent quarter on quarter.
There has been a steady increase in new retail entrants to tier-two cities.