Savills : Prime assets in first tier cities continue to attract capital on the loosening of monetary polices

• Retail sales grew 8.1% YoY in the first 11 months of 2015, 0.6 of a ppt lower than the same period last year.

• 285,200 sq m of new supply launched onto the market in Q4/2015, with annual supply totalling at 621,400 sq m

• First-floor shopping mall rents in prime retail areas increased 0.9% YoY to an average of RMB48.4 per sq m per day, while non-prime areas remained stable at RMB17.2 per sq m per day.

• 2015 saw vacancy rates in prime areas increase 1.0 ppt to 4.8% while non-prime areas (including downtown and decentralised areas) fell 0.8 of a ppt to 9.5%.

  Forecast

• 20 new shopping mall projects (1.3 million sq m of new space) are expected to launch onto the market in 2016, 10% of which will be located in prime areas.

• Qibao will receive the most new supply of any region with 230,000 sq m

• Wujiaochang will receive its third 100,000 sq m+ retail project with the opening of Hopson One, the area will then be the only one in the city with three or more projects in excess of 100,000 sq m.

• One new serviced apartment, Green Court Place, launched in Q4/2015, adding 482 units to the leasing market.

• Overall residential rents rose 0.8% in Q4/2015 to an average of RMB182.3 per sq m per month, up 1.2% YoY, while vacancy rates saw a slight increase of 0.1 of a ppt QoQ to 9.2%, down 1.8 ppts YoY.

• Serviced apartment rents increased by 1.6% QoQ to an average of RMB221.2 per sq m per month, up1.8% YoY, while vacancy rates fell 1.4ppts QoQ to 8.8%, and remained down 3.6 pptsYoY.

• Strata-title apartment rents increased by 1.9% QoQ to an average of RMB175.0per sq m per month, up2.4% YoY, while vacancy rates increased 3.7ppts QoQ to 14.0%, up 1.8pptsYoY.