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HONG KONG: Sun Hung Kai Properties (SHKP) is to give its Beijing APM shopping mall a second major facelift in as many years to reposition the centre to appeal to local middle-income shoppers rather than tourists.
SHKP, the largest property developer by market value in the world, says it will spend another 300 million yuan (RM138 million) on renovations to the mall, which is a major landmark in Beijing's shopping mecca of Wangfujing Street.
A CNY320 million refurbishment in 2008 was aimed at increasing the appeal of the mall to young customers, but shopping traffic in the area had since undergone a significant change, said Ian Choy Chi-keung, SHKP's chief representative in Beijing. "The retail market in Beijing is changing. The purchasing power of local middle-income and white-collar shoppers has grown substantially in recent years. The local customer market has matured," Choy said.
An in-house survey revealed that average spending by local customers at Beijing APM doubled to between CNY400 and CNY600 this year from CNY200 to CNY300 last year, which lifted it above the average CNY300 to CNY500 spent by tourists at the mall, said Raymond Ip, leasing director at the firm.
The profile and buying patterns of local shoppers has also changed. "They used to be government officials or businessmen and they bought products to give to others as gifts. That's why sales of luxury brands expanded aggressively. But in the past two to three years, salaries of white-collar workers have risen rapidly," said Ada Nip, head of retail at property consultancy DTZ's North China division. "The monthly salary of a university graduate may be only CNY3,000 to CNY4,000 in the first year, but will grow by many multiples in the next few years."
Nip said there were now about 10 shopping malls in Beijing that were geared to appeal to wealthy and big-spending customers. The market was saturated and as a result international luxury brands were not expanding aggressively this year.
"But the middle-class market still has potential. Raffles City Beijing, and Joy City in Xidan and Chaoyang are among the few shopping malls targeting the white-collar market," she said.
That change in shopping patterns prompted SHKP to reposition Beijing APM as a fashion shopping centre rather than continue as a tourism concept mall, Choy said.
Under the renovation scheme, the Chinese-style external walls of the mall will make way for large-scale light emitting diodes (LED) lighting external walls. As the landlord, SHKP will also change the tenant mix and introduce more international brands targeting younger local shoppers. One of the brands that has recently signed up for space in the mall is US-based fashion retailer Gap, which will open its 12,540-square-foot duplex store at Beijing APM this month. The retailer will invest more than CNY100 million in the store. It will be the only store on the mainland with all of Gap's brands.
Gap has expanded aggressively in China. It will open two stores in Beijing and two in Shanghai this year, and one in Hong Kong next year.
A US computer products company has also leased a three-storey space in the mall of more than 20,000 sqft. It will be the company's largest mainland store and is scheduled to open at the end of next year.
Another North American fashion retailer targeting younger shoppers has rented a four-storey space of more than 20,000 sqft and will open in the third quarter of next year, Choy said. "Half of our tenants will be fashion stores. We hope local customers will exceed tourist visitors after the facelift, which will be completed by the end of next year. Currently, half of our customers are local people."
The fashion items would not come cheap — clothes sold under the Zara or other international labels might cost up to CNY600 per item. But the spending power of the city's younger shoppers is rising. "They have benefited from growing asset values as property prices have risen significantly in the past few years. Also, since they have no family burden, they are more willing and able to spend," Nip said.
Beijing's retail market is responding. While five years ago there were only five shopping malls in the city, there are now about 30.
"To compete in the market, we hold regular events such as a New Year countdown, and offer loyalty benefits to VIP customers to attract shoppers. Our experience in managing shopping malls and our familiarity with mainland rules and governments are our strengths," Choy said.
With the strong retail market sentiment, Ip said rents at the mall had increased 30% over the past 12 months. The mall was also enjoying annual growth of 40% in traffic flow since the facelift in 2008 and annual turnover growth of 45%.
Nip said rents of the established shopping malls in key locations had risen 15% to 20% so far this year and she expected them to grow a further 10% in the coming year. — South China Morning Post
SHKP, the largest property developer by market value in the world, says it will spend another 300 million yuan (RM138 million) on renovations to the mall, which is a major landmark in Beijing's shopping mecca of Wangfujing Street.
A CNY320 million refurbishment in 2008 was aimed at increasing the appeal of the mall to young customers, but shopping traffic in the area had since undergone a significant change, said Ian Choy Chi-keung, SHKP's chief representative in Beijing. "The retail market in Beijing is changing. The purchasing power of local middle-income and white-collar shoppers has grown substantially in recent years. The local customer market has matured," Choy said.
An in-house survey revealed that average spending by local customers at Beijing APM doubled to between CNY400 and CNY600 this year from CNY200 to CNY300 last year, which lifted it above the average CNY300 to CNY500 spent by tourists at the mall, said Raymond Ip, leasing director at the firm.
The profile and buying patterns of local shoppers has also changed. "They used to be government officials or businessmen and they bought products to give to others as gifts. That's why sales of luxury brands expanded aggressively. But in the past two to three years, salaries of white-collar workers have risen rapidly," said Ada Nip, head of retail at property consultancy DTZ's North China division. "The monthly salary of a university graduate may be only CNY3,000 to CNY4,000 in the first year, but will grow by many multiples in the next few years."
Nip said there were now about 10 shopping malls in Beijing that were geared to appeal to wealthy and big-spending customers. The market was saturated and as a result international luxury brands were not expanding aggressively this year.
"But the middle-class market still has potential. Raffles City Beijing, and Joy City in Xidan and Chaoyang are among the few shopping malls targeting the white-collar market," she said.
That change in shopping patterns prompted SHKP to reposition Beijing APM as a fashion shopping centre rather than continue as a tourism concept mall, Choy said.
Under the renovation scheme, the Chinese-style external walls of the mall will make way for large-scale light emitting diodes (LED) lighting external walls. As the landlord, SHKP will also change the tenant mix and introduce more international brands targeting younger local shoppers. One of the brands that has recently signed up for space in the mall is US-based fashion retailer Gap, which will open its 12,540-square-foot duplex store at Beijing APM this month. The retailer will invest more than CNY100 million in the store. It will be the only store on the mainland with all of Gap's brands.
Gap has expanded aggressively in China. It will open two stores in Beijing and two in Shanghai this year, and one in Hong Kong next year.
A US computer products company has also leased a three-storey space in the mall of more than 20,000 sqft. It will be the company's largest mainland store and is scheduled to open at the end of next year.
Another North American fashion retailer targeting younger shoppers has rented a four-storey space of more than 20,000 sqft and will open in the third quarter of next year, Choy said. "Half of our tenants will be fashion stores. We hope local customers will exceed tourist visitors after the facelift, which will be completed by the end of next year. Currently, half of our customers are local people."
The fashion items would not come cheap — clothes sold under the Zara or other international labels might cost up to CNY600 per item. But the spending power of the city's younger shoppers is rising. "They have benefited from growing asset values as property prices have risen significantly in the past few years. Also, since they have no family burden, they are more willing and able to spend," Nip said.
Beijing's retail market is responding. While five years ago there were only five shopping malls in the city, there are now about 30.
"To compete in the market, we hold regular events such as a New Year countdown, and offer loyalty benefits to VIP customers to attract shoppers. Our experience in managing shopping malls and our familiarity with mainland rules and governments are our strengths," Choy said.
With the strong retail market sentiment, Ip said rents at the mall had increased 30% over the past 12 months. The mall was also enjoying annual growth of 40% in traffic flow since the facelift in 2008 and annual turnover growth of 45%.
Nip said rents of the established shopping malls in key locations had risen 15% to 20% so far this year and she expected them to grow a further 10% in the coming year. — South China Morning Post
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