Attention: Sentiment Index
Abstract: During the period, the enthusiasm of the sample enterprises under the observation of the opinion index to promote new projects declined significantly, and entered the off-season of opening. (Report period: 2024.03.26-2024.04.25)
During the reporting period, the enthusiasm of the sample enterprises under the observation of the Opinion Index to promote new projects declined significantly, and the opening season entered the off-season. In terms of corporate performance, the revenue of commercial real estate enterprises represented by domestic capital has increased significantly, and asset-light expansion is still an important way to achieve scale growth.
Consumer REITs First Quarterly Report Released, Swire Retail Sector Increases Capital In the capital market, there are currently 4 consumer REITs successfully listed and traded, judging from the disclosed quarterly report data, the performance is not outstanding, but in the long run, the value-added potential brought by good assets is still there. In terms of project development, Swire has been active during the period, with new developments in Sanya and plans to transform The Opposite House at Taikoo Li Sanlitun into a retail business.
In terms of sample projects, the brand adjustment during the period was more frequent, mainly to introduce retail brands, and the richness of the business format was significantly improved, in addition to luxury goods and clothing, it also introduced niche formats such as porcelain and bicycles. At the same time, more and more foreign brands are optimistic about the domestic consumer market and choose to open stores in shopping malls to test the waters.
The market has entered the off-season of opening, and the domestic retail revenue has increased significantly
Following the entry of a large number of retail and commercial projects into the market in the last reporting period, the reporting period has entered the traditional off-season of opening. During the period, only 4 retail commercial projects were opened among the sample enterprises observed by the Guandian Index, with a total supply volume of 860,000 square meters.
The new projects are developed by Hopson Commercial, Ingka Group, Longfor Group and CapitaLand Group, namely Beijing Super Hopson Hui, Xi'an Huiju, Longfor Chengdu Dong'an Tianjie and Chongqing CapitaMall Jiuzhang.
It is worth noting that although there were fewer projects opened during the period, the volume was larger, and the brand capacity and business mix were also more abundant.
Among them, the total volume of the Beijing Super Hopson Hui Super Hopson Hui project is nearly 500,000 square meters, and the total construction area of the East District opened this time is 300,000 square meters, accommodating more than 500 brands in catering, jewelry, digital, apparel retail and other formats. Xi'an Huiju also has a commercial area of 320,000 square meters, which is currently the largest commercial entity in Xi'an, with nearly 400 brands settled in.
Although there were not many projects opened during the period, many mainland commercial real estate enterprises disclosed the relevant results of the retail and commercial sector in 2023, which can provide a glimpse of their commercial development.
Data source: corporate financial reports, opinion index collation
In 2023, its operating shopping malls will achieve retail sales of 181.2 billion yuan, with an average daily income of about 500 million yuan, a year-on-year increase of 43.3%.
In addition, CR Mixc Life will also open 13 shopping malls in 2023, and the number of shopping malls in operation will reach 101 by the end of the year, achieving a rental income of 22 billion yuan from the landlord side, a year-on-year increase of 38.8%.
Among the enterprises with both light and heavy projects, most of the sample enterprises are still mainly self-sustaining, but the proportion of asset-light projects is gradually increasing. Taking Longfor Group as an example, it will open and operate 12 new commercial projects in 2023, of which 7 are asset-light projects.
In terms of revenue growth, Joy City Real Estate has the highest growth rate, with sales of shopping malls achieving sales of about 33 billion yuan in 2023, a year-on-year increase of 33%, and rental income of 2.998 billion yuan, an increase of 38.9% from 2.158 billion yuan in the same period. During the period, Chaoyang Joy City was the project with the highest rental income, about 665 million yuan, with an occupancy rate of 97%, and the ace project was still the ballast stone of performance income.
On the whole, third-party outreach is still an important means for sample enterprises to achieve scale growth. In 2023, for example, CR Vientiane Life signed 14 asset-light outreach projects, all of which are large-scale transportation-oriented development TOD projects in first- and second-tier cities. By the end of 2023, the number of expansion projects of CR Vientiane Life will reach 55.
At present, the operation output method adopted in the market can not only allow enterprises to avoid major capital investment, but more importantly, they can obtain commercial projects with better locations, and the probability of project operation success will be greater.
The first quarterly report of consumer REITs was released, and the Swire retail sector increased its weight
In terms of capital markets, there was new news during the period of consumer infrastructure REITs. CICC SCPG Consumer REIT, with Hangzhou Xixi Impression City as the underlying asset, was officially launched on April 8, 2024, raising a total of 3.26 billion yuan.
Unlike other listed REITs, the REIT issued by SCPG has received investment from Shenzhen Railway Group, Vanke's major shareholder, which intends to subscribe for no more than 30% of the total shares raised by the fund through strategic placement.
Up to now, there are currently 4 consumer infrastructure REITs listed and traded in the market. In addition, Huaan Bailian Consumer REIT and Huaxia Capital Outlet REIT are in the feedback stage and are expected to be successfully listed within this year.
Although the REITs market is still expanding, there are no surprises from the performance data of the three REITs that have been listed for a period of time. Among them, the income of Huaxia China Resources Commercial REIT was 100 million yuan, the net profit was -4.2658 million yuan, the net cash flow from operating activities was -6.163 million yuan, and the amount available for distribution was 51.2219 million yuan.
Huaxia Jinmao Commercial REIT achieved an income of 14.6213 million yuan, a net profit of 2.8187 million yuan, and a net cash flow of 16.0912 million yuan from operating activities. At the same time, the amount available for distribution in the current period of the fund is 8.8727 million yuan.
The income of Jia's physical beauty consumer REIT reached 19.649 million yuan, and the net profit was 6.6393 million yuan. The net cash flow from operating activities was 19.3509 million yuan. The amount available for distribution during the reporting period was 12.1132 million yuan.
The opinion index believes that although the short-term performance of the currently listed consumer REITs is not outstanding, they have a lot of upside in the long run.
At the asset level, unlike other types of REITs, consumer real estate has the highest level of marketization, and the potential for future growth of physical commerce is relatively greater.
At the project operation level, the underlying assets of the four listed consumer infrastructure REITs have all entered a period of stable operation, and the fundamentals of the cities where they are located are also good, with high consumption activity, and there is still great potential for development in the future.
In terms of corporate investment projects, during the period, Country Garden Culture, Commerce and Tourism Group signed a contract with Dafang Group on the Xi'an City Cube Project, which is located in the prosperous area of Yanta District, Xi'an City, with a total commercial volume of 140,000 square meters, and will build the Bile City project.
In terms of follow-up development, Country Garden Culture, Business and Tourism also plans to introduce sports and cultural formats, such as international fencing, green tree e-sports, etc., to explore a new development model of sports + business, and carry out non-standard business attempts.
In addition, Swire was also active in project development during the period. There is news from the market that Swire Properties' project in Haitang Bay, Sanya has been identified as Taikoo Li.
According to the opinion index, unlike other first- and second-tier cities, Sanya has strong tourism attributes, and in addition to continuing the advantages of Taikoo Li's product line, Swire also needs to consider the needs of tourist consumer groups when building projects in the future.
However, Sanya-Pacific Guli still has a number of competitors in Sanya's commercial market, and in addition to China Resources' plan to develop the MixC in the same business district, global luxury travel retailer DFS is also planning to build the DFS Divis Yalong Bay project.
In addition to the new developments, Swire is also planning to expand existing developments. During the period, Taikoo Li Sanlitun Beijing announced the launch of an asset enhancement plan to transform The Opposite House into an innovative retail space, promote the sustainable development of the Sanlitun business district, and support Beijing's development into an international consumption hub.
According to the Opinion Index, the asset upgrade will undoubtedly further enrich the commercial space and business formats of Taikoo Li Sanlitun, and its competitiveness in the Sanlitun business district will also be greatly enhanced, which will continue to contribute to the development of Swire's retail business in the mainland.
The richness of retail brands has been improved, and foreign brands have tested the domestic market
In terms of sample items, according to the observation of the opinion index, most of the dynamics during the period were dominated by the introduction of retail brands, while the introduction of F&B-related brands was relatively rare.
Specifically, retail brands such as well-known luxury goods, apparel, beauty and skin care, jewellery and accessories accounted for a more prominent proportion, which increased significantly compared with the previous reporting period. In addition, niche brands such as digital, fragrance, porcelain and bicycles have also been introduced, and the brand richness is higher.
Data source: Opinion Index collation
For example, during the period, the sample project Beijing SKP introduced a new LOMONOSOV store, while Chengdu IFS had a KEF Music Studio Chengdu experience store. The former is a Russian "veteran" luxury product, established in 1744 by Empress Elizabeth, the daughter of Peter the Great, as a royal "royal" porcelain; the latter is a British audio brand, and the opening of the store is the first wireless HiFi experience store in Chinese mainland.
It can be found that many foreign brands are constantly testing the domestic market, and shopping malls are their first stop. In terms of project selection, it mainly follows the principle of consistency with the brand tonality, and some niche high-end lifestyle brands choose to enter mid-to-high-end projects with high visibility, such as the first store of London-based independent accessories brand HANYING in China, which chose Chengdu Taikoo Li.
Data source: Opinion Index collation
From the perspective of store level, new stores and flagship stores accounted for the largest proportion during the period, followed by the first stores of various brands, including the first store in the country and the first store in the region. It is worth noting that the proportion of pop-up stores, pop-up stores and experience stores increased during the period.
According to the opinion index, pop-up stores or pop-up stores are usually temporary stores set up by brands in shopping malls, and the store operation time is relatively short, generally ten to dozens of days, and the main purpose is to expand brand influence.
In addition to a unique and eye-catching design, this type of store also has a high appeal to consumers with the launch of new or limited products.
For brands, this type of store can achieve the purpose of attracting traffic on the basis of low risk and cost, and can also plan and adjust brand strategy and product direction according to consumer response. For shopping malls, it is also an effective means to increase highlights and attract foot traffic.