SPOTLIGHT Hangzhou Report 2018 - Savills China Research Hangzhou
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Savills China Research
Hangzhou
SPOTLIGHT
Hangzhou Report 2018
savills.com.cn/research
2018 Hangzhou Report
City and Economy Overview
Hangzhou is at the forefront of China’s push to develop its tech industry, and serves as a blueprint
for other cities across the country. Hangzhou’s growth is symbolic as China’s continuing transition
from manufacturing to a value-added, serviced-based and technologically-advanced economy.
Economy &
Population size FIGURE 1: 2017 Top 10 city tertiary GDP per capita
Hangzhou’s GDP achieved an 8% real Guangzhou 105,214
growth in 2017, totalling RMB1,255.62 Suzhou 104,986
billion, which put the city as the 10th
Beijing 103,972
largest economy in China. Tertiary
Shanghai 85,942
GDP increased by 14% in 2017,
Hangzhou 82,988
accounting for 63% of the total GDP.
The percentage of tertiary GDP to Shenzhen 70,733
total GDP has risen from 49% in Tianjin 69,285
2011. The Hangzhou permanent Wuhan 65,555
population reached 9.47 million, up
Chengdu 46,061
3.05% YoY. Urban population reached
Chongqing 31,101
7.27 million, accounting for 76.8%
of the total population. According to - 20,000 40,000 60,000 80,000 100,000 120,000
2017 China Urban Research Report Source: National Bureau of Statistics
released by Baidu Maps (2017年
度中国城市研究报告), Hangzhou
was 9th place in China in terms of
TABLE 1 : Hangzhou GDP and population growth past decade
urban vitality1. The incoming work
force keeps the economy attractive
5 year CAGR
and builds up a virtuous cycle of 2007 2012 2017
(2012-2017)
business growth and technological
GDP (RMB bn) 410.1 780.2 1,255.6 10.0%
advancement.
Population (mn) 7.9 8.8 9.5 1.5%
1
Urban vitality: Baidu Maps uses big data to rank cities by
inflow of residents staying for more than two months.
Source: National Bureau of Statistics
savills.com.cn/research | 01
2018 Hangzhou Report
Wealth FIGURE 2: Number of billionaires by city 2016 vs 2017
Built on the fast growing 2017 2016
high-technology industry and 360
e-commerce, Hangzhou is quickly 330
becoming home to fortune. GDP 300
per capita increased 13.6% in 2017 270
240
to RMB136,656, and remains the
210
highest in Zhejiang province. Urban
180
disposable income per capita was 153
150
RMB56,276, up 7.8% YoY. The 120
123
robust IT industry in Hangzhou has 90
also made an increasing number 60
of billionaires; based on Hurun’s 30
2017 “The Richest People in 0
China” ranking, Hangzhou has 153
billionaires, 30 more than in 2016.
Hangzhou is the 4th in China in
number of billionaires and has the Source: Hurun
most billionaires among second-tier
cities.
Hangzhou is also home to 26 FIGURE 3: Sector breakdown of companies valued over
unicorns (start-ups valued over US$1 US$100 million
billion) and 105 companies valued
over US$100 million according to
2%
a weLian (a platform that connects 3%
5% 16%
investors and start-ups) report. The Finance
5% Corporate service
unicorns in Hangzhou rank third in E-commerce
volume after Beijing and Shanghai, Medicare and Health
7%
and second in value after Beijing. The Transportation
Hardware
unicorn companies have become 16%
Local daily life service
the forerunners in the country’s 8% Culture, Entertainment and Sports
development of new technologies Real Estate Service
and the digital economy. Unicorns Education
Games
in Hangzhou were valued at $141.9 11%
Social Network
billion and are focused mainly 15% Tourism
on e-commerce, IT and internet 11%
financing. Ant Financial, the company
that runs Alipay and is located in Xihu
district, was had the highest valuation Source: weLian
at US$75 billion.
02 | savills.com.cn/research
2018 Hangzhou Report
Within Hangzhou, the city also boasts institutions of higher education in
Infrastructure an expanding metro network. In Hangzhou, led by Zhejiang University,
2017, three lines were in operation a Project 211 and 985 university. In
With an extensive network of (Line1, 2 and 4) with a totalling length 2017, Hangzhou was home to 79,300
expressways and railways, Hangzhou of 107.02 km. The city plans to add graduates with around 10,000 holding
is highly connected with other 10 more lines—including extensions a master’s degree or above, up by
cities in Yangtze River Delta and to the three existing ones—as part 4.6% and 21.7% YoY, respectively,
Zhejiang province. Business people of the city development preparation the highest level on record.
in Hangzhou can make it to Shanghai for hosting the 2022 Asian Games. There are 13 international schools in
within an hour by high-speed train, The total length of metro network Hangzhou with seven in Xihu District,
making it a hub for cities south of when complete will be 387.8 km. including Cambridge International
Shanghai. Now Hangzhou has three While some cities are answering Centre of Hangzhou Yulan School,
train stations, with Hangzhou East government’s call to manage Fixed Hangzhou Entel Foreign Language
Railway Station being the newest one Asset Investments (FAI), Hangzhou, School and Marco Polo International
(completed in 2013) which specifically with its schedule to host the School.
serves high-speed rail passengers. international games, will continue to
As for airports, Hangzhou’s Xiaoshan improve its infrastructure. Hangzhou is also witnessing a
International Airport ranked as the revolution in its education industry—
10th largest international airport the launch of China’s first private
in China, serving 25.57 million
Education research university, Westlake
passengers both domestically and University. The school has received
internationally in 2017, up by 12.6% Hangzhou has an ample education over RMB100 million, and will rely
YoY. resources supplying its new industries on private donors for most of its
and growing economy. There are 18 funding. Currently, Tencent’s CEO
MAP 1: Hangzhou metro plan 2022
Source: Hangzhou Metro
savills.com.cn/research | 03
2018 Hangzhou Report
Pony Ma and Dalian Wanda’s founder down on earth, there are Suzhou (莫干山) as well as international trips
Wang Jianlin lead the donations. and Hangzhou.” With its canals and to cities such as Los Angeles and
The non-profit institution will carry waterways, hills, temples, Longjing Singapore.
out basic and advanced scientific tea plantations, Xixi National Wetland
research, emphasizing the cultivation Park and the world-renowned West With its natural beauty, the city’s
of innovative technologies and their Lake, Hangzhou has built a reputation tourism industry is growing. In 2017,
applications. The fact that Westlake as one of the most beautiful cities Hangzhou received 162.9 million
University relies on private business in China. Hangzhou ranks as the visitors and a total realized tourism
donations could create synergy 3rd most liveable city in China, revenue of RMB304.1 billion, up
between educational institutions and following Shanghai and Suzhou in by 15.8% and 18.3%, respectively.
businesses. ULI’s 2016 Chinese Mainland Real During the G20 Summit, Hangzhou
Estate Market survey. In addition, showed the world its charm with its
with more developed transportation beautiful natural scenery and city
Environment and Tourism
infrastructure, Hangzhou citizens can development and, in four years,
take easy getaway trips to nearby the 2022 Asian Games will provide
As the old Chinese saying goes
tourist spots like Thousand Island Hangzhou another opportunity to
“Up in heaven, there is paradise;
Lake (千岛湖) and Mogan Mountain showcase itself to the world.
04 | savills.com.cn/research
2018 Hangzhou Report
Hangzhou Development Plan
Covering a total land area of 16,596 sq km, Hangzhou is comprised of ten urban districts and two
rural counties (Tong Lu and Chun’an) and one county-level sub-city (Jian De). The development of
the city is driven by three main industries—high-technology, intelligent manufacturing, and
finance.
including Zhejiang University, which to implement the “national talent”
Hi-tech Industry creates collaborations between strategy, enhance scientific and
universities with hi-tech companies. technological innovation and hasten
The growth of hi-tech industry economic transformation. Modelled
in Hangzhou is focused on Future Sci-Tech City after Silicon Valley, the development
government-planned Chengxi Sci- Future Sci-Tech City (the City) is zone is the result of district
Tech Corridor. Crossing West Lake located west of downtown Hangzhou, government partnership with Alibaba
District (西湖区), Yuhang District next to Zhejiang University, nine and hopes to create an international
(余杭区), and Lin’an District (临安 kilometres from Westlake, and close ecosystem for local start-ups and
区), Chengxi Sci-Tech Corridor has a to the Xixi Wetlands. The City has a entrepreneurs.
total area of 224 sq km, 30 km from total core development area of 35 sq
east-to-west and 7 km from north- km. The City was established by the The City provides domestic and
to-south. As part of the priority work Hangzhou and Zhejiang governments overseas high-level talent with many
for the Zhejiang government under
its 13th Five-Year Plan, Chengxi
Sci-Tech Corridor is being built into
a world leading IT centre with three TABLE 2 : Three areas focusing on hi-tech industry growth
precincts—Future Sci-Tech City
(未来科技城), Zhejiang University Region Specialty Area (sq km)
Science City (浙大科技城), and
Qingshanhu Science City Chengxi Sci-Tech
Future Sci-Tech City Hi-tech 35
Corridor
(青山湖科技城) as well as a few
towns focusing on special industries Xixi Valley Internet Chengxi Sci-Tech
Fintech 3.1
Finance Town Corridor
and sectors. Chengxi Sci-Tech
Chengxi Sci-Tech
Corridor is also surrounded by Dream Town
Corridor
Internet based 3
a cluster of nine universities and
higher-education institutions Source: National Bureau of Statistics
savills.com.cn/research | 05
2018 Hangzhou Report
20.3 RMB bn 360.9 RMB bn
2011 2017
Future Sci-tech city total income from technology and trade related activities
favourable policies such as settlement Grade A office and the demand will China within five years.
assistance, house rental support, and increase when start-ups grow in size
start-up subsidiaries. Future Sci-Tech and scale. The City is expected to develop
City is now home to Alibaba’s Taobao further as Hangzhou improves
Town which has four phases with a Since 2017, a number of companies public transportation access for the
total GFA of 930,000 sq m. In addition, with Artificial Intelligence (AI) area. Metro Line 3 and 5, which are
there are also Alibaba affiliates such technologies such as automatic forecasted to be completed by 2021
as Cainiao (菜鸟网络) and Ding Talk driving, intelligent medical equipment and 2019 respectively, will go through
(钉钉) and other fast growing start- and digital image analysis have Future Sci-Tech City and Line 5 will
up companies such as Souche (大搜 started businesses in the City. Local connect to all the core submarkets in
车) and Rokid. Future Sci-Tech City is officials plan on developing the area Hangzhou.
seen as an emerging submarket for into a first-class AI industrial base in
MAP 2: Three main industry development areas
Source: Savills Research
06 | savills.com.cn/research
2018 Hangzhou Report
Xixi Valley Internet In terms of transportation, Xixi Valley children’s education, rental discounts
Finance Town Internet Finance Town is directly and tax benefits. Internet companies
Xixi Valley Internet Finance Town connected to highways such as have been sprouting up in Dream
covers an area of 3.1 sq km and Huhangyong highway, Hangning Town since its official launch in 2015.
has become the fintech capital of highway and Hangjinqu highway. The
the city. In order to grow the town, town is only 15-minute drive from the One success story is Immersion
local government accelerated the Hu Technology (映墨科技), a company
construction of key projects, land specialising in Virtual Reality (VR)
acquisition and relocation and Dream Town technology. The company started in
infrastructure improvement as well as Located in Future Sci-Tech City, 2014 in Dream Town with six people.
releasing favourable policies to attract Dream Town covers a total area of Then it expanded to around 30 people
companies and talent. 3 sq km. Dream Town comprises of and received RMB5 million of venture
two parts—the first is the Internet capital from DunAn Capital (如山创投)
By April 2017, more than 250 Start-up Village focusing on research, within a year. Later as the company’s
fintech companies, including Zhi development and production of core technology developed, the
Ma Credit and Mo Gu Jie (蘑菇街), internet-related products such as company grabbed opportunities to
were established in the town. Ant e-commerce, game making, software work with Foxconn and Alibaba and,
Financial Services is the frontrunner design, information service, big data in 2016, it successfully raised RMB38
of the fintech industry in China and and cloud computing, and the other million Series A capital investment.
is located in the town’s “Z Space”. is Angel Village focusing on finance, Today Immersion Technology has
Completed in Aug 2017, Z Space was investment and wealth management. built itself into a leading Chinese VR
built by Alibaba and now holds around Angel Village helps start-ups during company with R&D capabilities and
5,000 Alibaba employees. It was also their first rounds of funding. products specialising in children’s
announced during the 2017 Global education.
Blockchain Finance (Hangzhou) To attract internet start-ups, the local
Summit that China’s first blockchain government has also released many
industrial park will be created in the favourable policies related to the
town. hukou (household registration) system,
savills.com.cn/research | 07
2018 Hangzhou Report
production in line with “China Made wetland park. The park is expected to
Intelligent Manufacturing 2025”. be three times larger than Hangzhou’s
Industry
Xixi Wetland Park.
The growth of intelligent The Greater Jiangdong Industrial
manufacturing is focused on the Cluster is one of the core precincts As the development proceeds, the
government-planned Chengdong in the corridor and is specialized in area will also enjoy easy access by
Intelligent Manufacturing Corridor. manufacturing high-end equipment public transportation. Metro Line
The corridor has a total planned and intelligent products. 7 and Line 8 are planned to be
construction area of 500 sq km and completed in 2021 and will connect
covers five administrative districts To promote the development of the the development area with the rest of
including Jianggan, Binjiang, cluster, the local government has the city.
Xiaoshan, Yuhang and Fuyang issued policies to attract talent and
districts. The corridor focuses on companies such as subsidiaries for Currently, the industrial cluster
automobile, aerospace, robotics, young professionals to relocate. In is home to a number of famous
smart rail transit, new energy and addition, to improve liveability and domestic companies including
advanced industrial materials create an agreeable environment, the Dongfeng Yulong, Xizi Aviation and
manufacturing, as well as health care government is planning a 35 sq km Ansteel Group as well as foreign
companies like Ford and UPS. The
Chinese Academy of Sciences has
created four projects in the Greater
Jiangdong Industrial Cluster with
Planned construction area
specialisation in high-tech production
500 sq km 109 sq km of robots, automobile sensors and
pressure monitors. For example, one
of the projects—Leishen Laser—is
Chengdong Intelligent Greater Jiangdong
Manufacturing Corridor Industrial Cluster expected to create production value
of RMB1.5 billion within the next five
years.
08 | savills.com.cn/research
2018 Hangzhou Report
International Centre by Oceanwide.
Finance Industry QJNC currently has Metro Line 2 and
Line 4 connecting it to the rest of the
1.29 million sq m
Besides traditional Central Business
city. With improved accessibility, a
District (CBD) areas such as
maturing business environment and
Huanglong and Wulin, Qiantang
comparatively low rents, QJNC has
River Finance Bay is a new planned QJNC Grade A office
convinced a number of companies
area home to financial headquarters, stock by 1H/2018
to relocate from traditional business
private funds, internet finance and big
areas. To support the growth of
data companies.
the area and encourage young
professionals to settle down in QJNC,
Qianjiang New City the area has built up a number of
Qianjiang New City (QJNC) is the core
educational resources including Qianjiang Century City
area in the Qiantang River Finance
international schools like Qianjiang Qianjiang Century City (QJCC) is
Bay and is also Hangzhou’s new
BASIS International School. the emerging area in Qiantang River
CBD. QJNC is in the southeast side
Finance Bay which is south of the
of Jianggan district and north bank
As the new CBD, QJNC also has Qianjiang River.
of the Qiantang River and is only five
the new headquarters for the city
km from West Lake. QJNC has a total
government as well as some other Before the 2022 Asian Games, QJCC
area of 15.8 sq km of which 4.02 sq
public buildings like the Hangzhou plans to have a total stock of 1.55
km is core development area.
International Conference Centre, million sq m Grade A and Grade B
which hosted the 2016 G20 Summit. office space with a number of eye
QJNC has seen a number of
With strong amenities, well-developed catching high-rises commercial
high-quality commercial projects
infrastructure, high density of high- projects including The Gate of
developed by well-known domestic
rises, and easy access to downtown Hangzhou by Greenland, Cinda
and international developers over the
areas, QJNC is becoming an Centre by Cinda Group, Vanke Centre
past several years including Raffles
important CBD in Hangzhou for by Vanke and a project by China
City by CapitaLand, MixC Tower by
commercial growth. Resources.
China Resources and Oceanwide
savills.com.cn/research | 092018 Hangzhou Report
Insurance, Guosen Securities, 163. support, tax break and others.
com, Sense Time and Paytm. A nice environment and unique
architecture makes the area an
Over Jade Town of Shannan appealing place for professionals to
(玉皇山南基金小镇) live and work. People are attracted by
2,500 FUNDS Jade Town of Shannan is a well- the beautiful natural scenery including
known special town in Qiantang clear water ponds, meandering creeks,
Jade Town of River Finance Bay. Located between spritely trees and distinctively
Shannan manages
Yuhuang Mountain to the north and Jiangnan-style buildings. By April 2018,
Qiantang River to the south, Jade there has been 2,589 funds (including
Town of Shannan covers an area DH Fund Management, Kaitai Capital,
of five sq km. Following the model and Cybernaut) that have opened in the
Hangzhou Olympic and International of hedge fund town Greenwich, town which are collectively managing
Expo Centre will be built in QJCC. The Connecticut, US, Jade Town of RMB1,060 billion in assets.
Centre comprises of a main stadium Shannan Fund was officially opened
that can hold 80,000 people, a tennis in 2015 and is building itself into a As part of the supporting facilities,
stadium that can hold 10,000 people, funding and investment hub. the town has ample educational and
a swimming stadium with 6,000 seats medical resources including Wahaha
and a comprehensive training stadium The local government has released International School and Shaoyifu
with a total area of 180,000 sq m. The a number of favourable policies to Hangzhou International Medical Centre
entire centre with a total buildable incentivise the growth of the town (邵逸夫医院杭州玉皇山南基金小镇国际
area of 2.7 million sq m will be the including subsidies for building up 医疗中心).
core area for 2022 Asian Games. funds and investments, office rental
The Asian Games will not only bring
widespread attention to QJCC, but
also stimulate the development of
the area by creating a large number
of jobs. Besides Metro Line 2 that is
currently in operation, Metro Line 6
and Line 7, which are expected to be
completed before the Asian Games,
will go through QJCC.
Besides the financial industry, QJCC
also plans to build AI, big data, cloud
computing and music industries. The
first national music industry base
will be established there. Currently,
QJCC is home to a number domestic
and international companies such as
China Construction Investment Group,
China Railway Investment, Zheshang
10 | savills.com.cn/research2018 Hangzhou Report
Hangzhou Real Estate
Market Overview
Office Market
“Continued optimism in the commercial markets and
Hangzhou’s office market has seen increased interests from investors, especially in QJNC
rapid growth in the past decade. The and future Sci-tech city. The retail market will take time
city has a total Grade A office stock to upgrade and grow with the continnous participation
of 1.99 million sq m by 1H/2018 with
of international operators.” James Macdonald, Savills China
annual new supply averaging 335,000
sq m in the past three years. Before
Research
the development of QJNC, the city’s
Grade A office stock was mainly
in prime areas like Huanglong and working brands. For example, naked in 1H/2018. The growth in rent
Wulin. Starting from 2010, QJNC has Hub opened its first space in Euro was mainly driven by the strong
received a large amount of new supply America Centre located in Huanglong, performance of QJNC and high-
which peaked in 2017. SOHO 3Q leased around 6,000 sq m quality new supply in Hangzhou’s
in Zhejiang Fortune Finance Centre office market.
Despite the influx of new supply, and WeWork will set up its first
Hangzhou Grade A office market has location in Hangzhou in Gonglian Huanglong and Wulin are the prime
also seen growing amount of demand Plaza, taking up around 10,000 sq m office markets in Hangzhou with
in recent years. The city-wide Grade in Q4/2018. Many other co-working a total stock of 535,500 sq m in
A office market vacancy rate was at operators are forecasted to expand to 1H/2018. Faced with the competition
14.2% by 1H/2018. Hangzhou market in the near future. from QJNC, landlords in these two
Like in other cities across the country, areas have been under the pressure to
In terms of the demand side for the co-working brands are moving from lower rents to retain tenants resulting
Grade A office space in Hangzhou, Grade B office buildings to Grade A in a decrease in prime market rent
financial, information and professional buildings in Hangzhou, helping absorb of 1.2% YoY. Recent completion of
services sectors remain the key Grade A office space and putting premium quality projects such as
demand drivers. There has also been upward pressure on rent. Kerry Centre and Huanglong Vanke
a notable uptick in leasing activity Centre Building A&B, as well as
among real estate and architecture City-wide Grade A office rents more supply in the coming years will
companies. In addition, the market increased to an average of RMB5.4 make Huanglong and Wulin more
saw increasing demand from co- per sq m per day, up by 3.4% YoY competitive.
savills.com.cn/research | 112018 Hangzhou Report
Over the past years, QJNC has seen (including projects from Greenland, Wantong Centre, AUX Future Centre,
a large amount of new supply, a lot China Resources, Vanke, Shimao and and Fuli Centre in the coming years.
of which are high-quality commercial Cinda) will be complete in 2021 and Supply is expected to be met by
projects developed by well-known 2022 in QJCC. The premium quality demand from hi-tech companies due
domestic and international developers projects will take time to absorb and to the “Alibaba impact”. Binjiang is
such as Raffles City by CapitaLand, place pressure on surrounding areas. also expected to see several Grade A
MixC Tower by China Resources As home to the campus for Alibaba’s projects in the next a couple of years
and Oceanwide International Centre Taobao Town, Future Sci-tech City is including Shimao Intelligent Gate (世
by Oceanwide. With the business expected to see the launch of several 茂智慧之门) at the end of 2018.
environment maturing in QJNC and Grade A projects including EFC,
the area’s metro connectivity and
retail amenities improving, there is
increasing demand for office space
in the area, which has allowed FIGURE 4: Grade A office supply, demand and vacancy rate,
landlords to raise rents. The average 2005-1H/2018
rent in QJNC was RMB4.99 per sq Supply (LHS) Take-up (LHS) Vacancy rate (RHS)
m per day, up by 7.6% YoY. Internet 35%
companies and financial companies 500,000
take up most of the demand for 30%
office spaces in QJNC. With the total 400,000 25%
stock reaching 1.29 million sq m by
1H/2018, the submarket will keep 20%
300,000
sq m
absorbing space over the next several
years, further pushing up the rents 15%
till demand and supply shift to QJCC 200,000
10%
around 2022.
100,000
5%
Qingchun Road is another non-prime
area in the Hangzhou office market 0 0%
with a total stock of Grade A space of
227,100 sq m by 1H/2018. Companies
in financial and pharmaceutical Source: Savills Research
industries account for most of the
tenants in Qingchun mainly due to
a number of governmental financial
FIGURE 5: Grade A office rents , 2009-1H/2018
institutions including Zhejiang
Province Securities Regulatory
Huanglong Wulin Qingchun Road Qianjiang New City
Commission and Zhejiang Province 170
Banking Regulatory Commission and
large, leading hospitals being located 160
in the area. However, since Qingchun
(Q1/2009=100）RMB/sq m day
150
Road is surrounded by West Lake, no
new supply is expected to be added 140
to the submarket in the next several
130
years. As a result, the growth of the
area will rely heavily on renovating and 120
upgrading the current stock.
110
Besides the submarkets mentioned 100
above, the local government also
plans to develop other areas for 90
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
commercial use including QJCC,
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Future Sci-tech City and Binjiang.
The majority of new developments Source: Savills Research
12 | savills.com.cn/research2018 Hangzhou Report
has Taobao Xinxuan (淘宝心选) which
Life Hub and Intime City (Linping) in
sells popular products on Tmall, the
Retail Market West City. Additionally, there was one
Tmall Future Store (天猫精灵未来馆)
project—Huarun Wanxiang Hui—that
showcasing the latest tech products,
Hangzhou’s retail market has a total launched in suburban Xiaoshan.
Hema Supermarket (盒马鲜生) that
stock of over 3.44 million sq m of
has 440 seats for dining. Though all
high-quality retail space in 1H/2018, As the first project launched in prime
these technologies created by Alibaba
with only about 30% located in the area in the last 12 months, Hangzhou
are still in experimental stages and
city’s retail prime area including Tower Central Plaza—with a total retail
have some teething issues, they are
Lakeside, Wulin and QJNC. Lakeside GFA of 94,000 sq m—has attracted
expected to be at the forefront of the
and Wulin, east of West Lake, are a lot of attention. The mall is in the
retail revolution in the future.
traditional prime shopping areas in underground area of Wulin Square
Hangzhou with high-end shopping with two retail floors conveniently
On the demand side, the growing
malls such as Hubin Yintai and Kerry connected to Wulin Square metro
retail sales and tourism industry
Centre. QJNC has developed into a station (Line 1). The mall positioned
enables the city to absorb the large
prime retail area in the past ten years itself as a fashionable place for young
amount of new supply, keeping the
with the construction of MixC and people—with a number of trendy
overall city vacancy rate around 10%.
Raffles City. The rest of the stock shops such as the first offline Kaola
The average vacancy rate of shopping
is located in the non-prime areas shop in Hangzhou, the first Adidas
malls increased by 2.7 ppts HoH to
including the west, north, and south Running shop in China, Zukka, Super
11.0% mostly because of the new
of the centre city as well as Qingchun Species (超级物种) and MOOGAN (摩
supply. Lakeside saw a decreased of
and Binjiang. 根家居).
1.7 ppts HoH due to strong leasing
performance in a couple of leading
Hangzhou’s retail market has seen Besides the five shopping malls,
projects including Hubin Yintai Phase
surge in supply in the past several Alibaba opened its first offline mall
Four. The vacancy rate in West City
years, especially in non-prime areas. Qin Cheng Li (亲橙里) in Future
and Wulin increased by 5.4 ppts HoH
New supply in the past three years Sci-Tech City. The shopping mall
and 4.0 ppts HoH, respectively, due to
totalled 1.2 million sq m, of which only with a total retail GFA of 40,000 sq
three new projects.
one-fifth were located in prime areas. m meets the daily needs of Alibaba
In the first half of 2018, four retail employees as F&B takes 40% of the
With strong consumption power,
projects were launched in downtown whole area. The shopping mall is also
Hangzhou has been the city that
Hangzhou, adding a total retail GFA an experimental place for Alibaba’s
many brands choose to open their
of 398,000 sq m including Hangzhou new retail technologies like AR mall
first stores in eastern China outside of
Tower Central Plaza in Wulin, City Mall guides, VR fitting rooms, and digital
Shanghai. Victoria’s Secret opened a
Phase 2 in North City and Yuhang displays for targeted ads. 亲橙里mall
full-line store in In77 D (Hubin Intime
Phase 3). Household appliances
brands takes a comparatively
large presence in Hangzhou’s retail
FIGURE 6: Downtown retail supply and stock, 2008-1H/2018
market as Hangzhou residents
Shopping malls (LHS) Department stores (LHS) Stock (RHS) are enthusiastic about purchasing
950 4 property. In the F&B sector, local
850 3.6 Hangzhou food still dominates the
750 3.2 market followed by specialities such
as hot pot, Japanese/Korean food
650 2.8
and Sichuan food while Guangzhou
thousand sq m
550 2.4
million sq m
cuisine finds it comparatively hard to
450 2 break into the Hangzhou market.
350 1.6
250 1.2 City-wide first-floor rents increased
by 2.5% YoY to RMB18.9 per sq m
150 0.8
per day mainly due to annual rental
50 0.4
growth of certain existing projects.
(50) 0 QJNC had the highest HoH rental
08 09 10 11 12 13 14 15 16 17 1H/2018
growth among all submarkets at 1.7%
Source: Savills Research
savills.com.cn/research | 132018 Hangzhou Report
to RMB26.7 per sq m per day thanks
to the strong leasing performance of FIGURE 7: Retail rents and vacancy rates, 1H/2017 vs 1H/2018
the landmark Raffles City.
1H/2017 rent (LHS) 1H/2018 rent (LHS)
1H/2017 vacancy (RHS) 1H/2018 vacancy (RHS)
Looking forward, the market is 30 18%
expected to welcome 731,400 sq m 27 16%
of new supply in the second half of 24
14%
2018 with several landmark projects
RMB per sq m per day
21
12%
including Joy City, Knowledge Mall, 18
10%
In77 E (Hubin Yintai Phase 5). The 15
large amount of new supply will put 8%
12
pressure on vacancy rates. With 9
6%
the existence of high-end retail 6
4%
projects including Kerry Centre, Joy 2%
3
City, Raffles City, Hangzhou’s retail
0 0%
market is expected to see a gradual Prime Non-prime Overall
improvement of retail stock. Source: Savills Research
In the end of May, Hang Lung
Properties acquired a land site of
194,000 sq m GFA in Wulin for an
accommodation value (AV) of around
RMB55,000 per sq m and 108%
premium with a plan to develop a
large-scale mixed-use commercial
complex, comprised of a world-class
mall and office tower. Other bidders
included Alibaba, Sun Hung Kai and
Wharf. The fierceness of the bidding
for a premium site in Hangzhou
indicated developers’ confidence
about the growth of commercial
market in Hangzhou.
14 | savills.com.cn/researchPlease contact us for further information Research Central Management Hangzhou James Macdonald Siu Wing Chu Anson Chan Senior Director Managing Director General Manager China Central China Hangzhou +8621 6391 6688 +8621 6391 6688 +86571 8102 0222 james.macdonald@savills.com.cn siuwing.chu@savills.com.cn anson.chan@savills.com.cn Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research. savills.com.cn Savills China Research
You can also read
