At the end of 2023, Shanghai Zhenru Unipark MAX will make its grand debut, becoming the largest newly opened commercial complex in Shanghai with a total commercial volume of more than 320,000 square meters.
This is the first product of the MAX series, a new product line of China Shipping Commercial. After the opening of the project, it quickly went out of the circle, and continued to remain in the TOP1 of the popular list of Dianping Shanghai shopping malls for a period of time.
The sense of presence of Zhonghai Shopping Center is slowly rising. This is what China Shipping calls "tomorrow" business, and Yan Jianguo responded at the performance meeting in 2019 that China Shipping has established a sustainable development strategic business structure today, tomorrow and the day after tomorrow.
"Today" is the residential sector, which is the company's core business, with an annual investment of about 90% of resources; "Tomorrow" is commercial, including offices, shopping malls, long-term rental apartments, etc., with an annual resource investment of about 8%, and 2% of resources are used to develop future-oriented "acquired business", including pension industry, supply chain management and other related diversified businesses around the upstream and downstream industrial chain of real estate development and operation.
However, for a long time, the presence of Zhonghai Commercial's shopping center has not been high. With the continuous entry of new projects into the market in the past two years, Huanyu Commercial has gradually become well-known to the public.
According to the 2023 results disclosed by COLI at the end of March, China Overseas Real Estate's revenue during the period was RMB202.52 billion, up 12.3% year-on-year. Among them, the revenue of commercial property was 6.36 billion yuan, a year-on-year increase of 20.9%, and if joint venture projects are included, the revenue reached 7 billion yuan, of which the revenue from first-tier cities and new first-tier cities accounted for 87%. However, the proportion of commercial properties in total revenue during the period was still small, at 3.02%.
Today, China Shipping's business tomorrow is slowly thriving. According to the performance guidance given by China Overseas Real Estate, the commercial revenue is expected to achieve the growth target of 25% in 2024, on the basis of last year's growth of 21%.
Tomorrow business
The commercial property of China Overseas Real Estate is a comprehensive urban operation service platform with office buildings and shopping malls as the core, long-term rental apartments, hotels, logistics and industrial parks, and elderly care as the elements.
In 2023, China Overseas Commercial Property revenue was RMB6.36 billion, up 20.9% year-on-year, with office business still accounting for half of the total, with office revenue of RMB3.43 billion, shopping malls RMB1.68 billion, long-term rental apartments RMB190 million, and hotels and other commercial properties of RMB1.06 billion.
As for the reasons for the growth of commercial income, China Overseas Real Estate said that the entry of new projects into the market and the rapid development of light asset management business jointly promoted the growth of commercial property income.
In terms of breakdown, the newly contracted area of office buildings during the year was 930,000 square meters, a year-on-year increase of 11%, the proportion of leased area of more than 2 years was 83%, the occupancy rate of more than one year was 86.9%, the occupancy rate of more than three years was 90.2%, the gross profit margin was 70.5%, the lease renewal rate reached 64%, and the average rent increased by 1.3% year-on-year.
Shopping mall revenue grew rapidly, with a year-on-year increase of 40.2%. During the period, the overall occupancy rate was 96.3%, sales increased by 66% year-on-year, same-store sales increased by 22% year-on-year, and passenger flow increased by 57% year-on-year. The occupancy rate of projects over three years is 98.4%, and the gross profit margin is 64.4%
Long-term rental apartments are located in 13 cities, with a new opening scale of 120,000 square meters. The overall self-owned scale reached 730,000 square meters, and the occupancy rate of houses for more than half a year reached 94.4%. During the period, the hotel achieved a 104% year-on-year increase in operating revenue, an occupancy rate of 63%, an increase of 23 percentage points year-on-year, and an average room rate increase of 35%.
It is understood that China Overseas Real Estate will add 12 new commercial properties into operation in 2023, including 4 office buildings, 5 shopping malls and 3 long-term rental apartments, with a total construction area increase of about 1.05 million square meters.
Data source: corporate announcements, collation by business customers
Among them, in the shopping mall sector, China Overseas Real Estate added four new asset-heavy commercial projects in Shenyang Heping Unipark, Shanghai Zhenru Unipark MAX, Tianjin Meijiang Unipark and Wuhan Jianghan Unipark, with an additional commercial area of 591,000 square meters.
By the end of 2023, China Overseas Commercial has 152 self-owned projects (including those under construction and to be built), with a scale of 10.14 million square meters, of which office buildings account for 52% and shopping malls account for 34%. In addition, in recent years, China Shipping has increased its development in asset-light, with 19 asset-light projects with a scale of 1.5 million square meters.
Data source: corporate announcements, collation by business customers
It can be found that China Overseas Commercial mainly focuses on core cities. In the scale of commercial reserves, the area of first- and second-tier cities accounts for 97%, and the area of first-tier and new first-tier cities accounts for 87%.
In terms of project entry plan, China Overseas Commercial is expected to enter the market 17 projects during the 14th Five-Year Plan period, including 4 new shopping malls (Beijing, Shanghai, Guangzhou, Chengdu), 5 new office projects (Beijing, Shanghai, Tianjin, Suzhou, Nanjing), and 8 new long-term rental apartment projects (Shenzhen, Tianjin, Nanjing).
After the "14th Five-Year Plan", it is expected to enter the market 21 projects, including 5 shopping malls (Shanghai, Shenzhen, Wuhan, Chengdu and Shenyang), 8 office buildings (Shanghai, Suzhou, Chengdu and Tianjin), and 8 long-term rental apartments and hotels (Shenzhen, Shanghai and Hainan).
Deconstructing Huanyu
The increase in revenue of China Overseas Commercial was due to the number of new projects opened in the past two years. In 2020, the business revenue of China Overseas Shopping Center was only 870 million yuan, accounting for 21.75% of the total revenue of China Overseas Shopping Center.
In 2022, five shopping malls entered the market, which directly drove the rental income of China Overseas Shopping Center to 1.2 billion yuan, and the proportion of total commercial revenue also climbed to 23%. In 2023, the revenue of China Overseas Shopping Center will reach 1.68 billion yuan, accounting for 26.42% of the total commercial revenue.
Next, with a number of reserve projects entering the market, the proportion of shopping mall revenue is expected to continue to increase.
The project is mainly located in Beijing, Shanghai, Guangzhou, Chengdu, Zhuhai, Foshan, Jinan and other core first- and second-tier cities, generally located in core mainstream cities and high-quality urban areas, focusing on the development of complex mode.
It has maintained the consistent development route of the China Shipping System.
After years of development, Zhonghai Huanyu Commercial has gradually formed four major product series, including the city-level one-stop commercial center "Unipark/Unipark MAX", the exquisite business commercial center "Huanyuhui", the boutique community commercial center "Huanyufang" and the characteristic product line Fuhuali.
From the perspective of product line distribution, up to now, Huanyu Commercial has opened 23 projects, including 13 Unipark series (including Unipark MAX - Shanghai Zhenru Unipark MAX, asset-light Unipark - Guangzhou Nansha Unipark), 5 Huanyu Hui series, 3 Huanyu Fang series, and special projects Zhuhai Fuhuali and Chengdu Tiexiangsi Water Street.
The Unipark series is the "fist product" of China Shipping Commercial. On December 22, 2023, Shanghai Zhenru Unicity MAX opened, which is also the highest flagship of Zhonghai Huanyu Commercial to create Huanyu products.
"Unipark MAX" is positioned as a large-scale commercial complex in a first-tier city. With a total construction area of about 1 million square meters, the complex includes seven major business formats, including large-scale commercial buildings, super high-rise office buildings, theaters, Sam's, parks, long-term rental apartments and high-end residences.
According to previous news, Zhonghai Huanyu Commercial also planned to upgrade the Guangzhou Asian Games City Plaza, or will create a "Universal City Sample" with updated stocks.
Huanyuhui focuses on commercial customers and is positioned as an ecological product line for office business facilities. Therefore, Huanyuhui is mainly distributed in Shanghai, Beijing, Chengdu, Suzhou and other cities with dense office layout, located in CBD business district or regional core business district, adjacent to the city's main roads or convenient rail transit, and the main customer group is business white-collar workers, with a volume of 2-30,000 square meters.
Universal Place is a community business based on China Overseas Residential Property, which is the last link in the coordinated development of the residential business of China Overseas Commercial and its parent company, China Overseas Real Estate.
The project is located at the intersection of Jiuzhou Avenue West and Baishi Road in Gongbei, Zhuhai, covering an area of about 68,000 square meters and a total development area of about 320,000 square meters, covering super high-rise Grade A office buildings, international chain brand hotels, boutique residences and block-style shopping centers.
It is reported that as the first renovation project in Zhuhai, this project retains a number of old cultural and industrial sites, and protects and renovates.
Tenants include a number of well-known retail brands and popular restaurants.
In the real estate downturn, the importance of business has become more prominent. In October 2023, China Overseas Real Estate Consortium won the commercial and residential land in Xuhui, Shanghai, at a reserve price of 24.016 billion yuan, and will build an industry-city integration complex on top of the subway in the future, with a shopping center of more than 150,000 square meters expected to be planned.