2 Consumer demand in Shanghai’s retailsector rose steadily. From January toFebruary, Shanghai achieved a total retailsales of consumer goods of RMB206.089billion, an increase of 6.7% over the sameperiod of 2017. Ground foor prime retail rents in Shanghai’smajor retail areas increased by 1.0% quarteron quarter (Q-o-Q) to RMB58.5 per sqmper day in the frst quarter (Q1) of 2018 (seeTable 1). The overall vacancy rate of shopping mallsremained unchanged at 14.4% in Q1 (seeTable 1).We expect that over three million sqm of newretail supply will be launched in the comingthree quarters of 2018.Jing’an Imix Park (190,000 sqm) in NorthJing’an is scheduled to open in the secondquarter (Q2), whilst LC Mall in Pudong is setto open in the third quarter (Q3).In Q2, retail rents are expected to increasesteadily and the vacancy rate will decreaseslightly to 14.0%.The UK high street brand TOPSHOP willopen its fagship store on the ChineseMainland at No 775 Huaihai Middle Road inQ3. F&B RETAILERS REMAINEDTHE MOST ACTIVE INQ1 2018 Due to the Spring Festival, the market was quiet and noshopping malls opened in prime retail areas during Q1 2018.TABLE 1 Shanghai prime retail market indictors IndicatorQ1 2018 fgureQoQ changeOutlook(Q2 2018) New supply 0n/a↗ Ground foorrentRMB58.5 / sqm / day↑ 1.0%↗ Vacancy rate14.4%↘ Capital valueRMB263,000 / sqm↑ 2.8%↗ Source: Knight Frank Research 3 RESEARCHSHANGHAI RETAIL MARKET REPORT Q1 2018 In Q1, the average rent of primeshopping mall’s ground foors reachedRMB61.9 per sqm per day, whilst that ofprime street shops reached RMB55.0 persqm per day.Due to outstanding performance andgrowing occupancy rates, rents of someshopping malls including MetropolitanMall on Nanjing East Road, XintiandiStyle Shopping Mall in Xintiandi andHong Kong Plaza on Huaihai MiddleRoad saw slight increases. Offcially opened in November 2017,HKRI TaiKoo Hui currently has anaverage ground-foor rent of RMB35-50per sqm per day.In Q1, F&B (Food & Beverage) retailerswere active players in shop leasing. Alocal restaurant and bar, for example,rented a 970-sqm ground foor retailspace in Aegean Shopping Mall forRMB8.5 per sqm per day. The achievable pre-letting rents involvingF&B tenants in BFC, Huangpu Districtranged from RMB10 to RMB15 per sqmper day, while those in Sinar Mas NewBund, North Bund, Hongkou Districtranged from RMB8 to RMB12 per sqmper day.In the primary strata-titled sales market,transactions exceeding RMB100,000 persqm were concentrated in Yifeng TimesSquare, Pudong District. In Q1, nine retailunits there were sold for an average priceof RMB111,708 per sqm. RENTS &PRICES TABLE 2 Selected retail property leasing transactions, Q1 2018 DistrictBuildingFloor / unitTradeArea(sqm) Rent (RMB /sqm / day) HongkouSinar Mas New BundLevel 1 unitF&B38618 HuangpuBFCBasement 1 unitF&B9520 MinhangAegean Shopping MallLevel 1 unitF&B9708.5 PutuoChangfeng Joy CityLevel 1 unitCosmetics40018 PudongForte Vanke Energy MoreLevel 1 unitApparel3208 Source: Knight Frank Research Note: all transactions are subject to confrmation TABLE 3 Selected retail property sales transactions, Q1 2018 DistrictBuildingFloor / unitArea(sqm) Price (RMB million) Price (RMB / sqm) PudongYifeng Times SquareLevel 1 unit748.0108,447 PudongHengyue PlazaLevel 1 unit122.98.166,256 HuangpuNew Rich PortLevel 1 unit143.910.170,017 SongjiangShanghai AegeanLevel 1 unit89.65.763,961 MinhangRoyal Territory Level 1 unit1078.074,908 Source: Shanghai Real Estate Trading Centre / Knight Frank Research Note: all transactions are subject to confrmation.FIGURE 1 Shanghai ground-foor retail rents in prime areas Source: Knight Frank Research4 Though there were no retail malls opened in prime areas during Q1, the market witnessedthe partial openings of some malls in the suburb areas.For example, the street shopportion of Qingpu Powerlong Plaza, the Macau Street (Phase I) opened on 26 January.With a total retail gross floor area (GFA) of approximately 110,000 sqm, Qingpu PowerlongPlaza is the first large-scale mixed-use development in the eastern part of Qingpu, alsothe first one-stop topside shopping mall of a metro station in Qingpu. The retail portionopened in the quarter has a total GFA of nearly 20,000 sqm, including over 60 diversifiedF&B retailers. Its shopping mall portion is set to open this year.SUPPLY & DEMAND FIGURE 2 Shanghai shopping mall annual supply and stockSource: Knight Frank Research On 19 January, Bailian Group’s OrientalDepartment Store Wujiaochang wastransformed into an urban outlet underthe new brand of UMAX. Featuring atotal retail GFA of approximately 30,000sqm with an average retail unit size of 80to 100 sqm, UMAX is Bailian’s first urbanoutlet project. Its anchor tenant is the3,000-sqm Dangdang Bookstore.In Q1, consumer demand in Shanghai’sretail sector saw a steady rise.Analysed by sector, the retail salesof the wholesale and retail sectorsincreased 6.8% year-on-year (Y-o-Y)to RMB187.815 billion, whilst those ofthe accommodation and F&B sectorincreased 5.7% Y-o-Y to RMB18.275billion.According to the statistics of theMunicipal Commerce Commission,during the Spring Festival (8 to 21February), the total retail sales of 276retail shops and restaurants in Shanghaireached RMB10.79 billion, an increaseof 10.4% Y-o-Y. The total number oftourists Shanghai received remainedunchanged at 4.43 million. Tourismrevenue reached RMB4.941 billion, anincrease of 1.5% Y-o-Y. 。。。。。。