Regional and community-based commercial projects are popular, and experiential consumption is favored

Real estate companies are investing in commercial real estate projects in Shenzhen

Shenzhen’s commercial real estate projects have achieved rapid iteration from scratch to high-end. The picture shows Shenzhen Vientiane City. Photo by Nanfang Daily reporter Lu Li

With the dawn of the real estate stock era, for real estate companies, the importance of obtaining high-quality commercial real estate chips has increased significantly.

In the past year, China Resources Land has continued to lead China's commercial real estate, and Shenzhen real estate companies are not far behind. Shenzhen Yip, Hongrongyuan, Vanke, Kingkey, Galaxy, etc. have all produced impressive works.

Shenzhen real estate commentator Li Yujia believes that there is a big difference between commercial and residential projects, and businesses must be self-sustaining. They must consider the matching of capital flow investment and revenue cycle of real estate companies, and test the operation and investment capabilities of real estate companies.

The reason why real estate companies can attract real estate companies to increase their investment in the Shenzhen market lies in the advantages of Shenzhen’s commercial real estate industry. In Li Yujia's view, the reason why so many real estate companies in Shenzhen have invested in the commercial real estate sector is related to Shenzhen's urban economic activity. Shenzhen has a majority of young people, a large net population inflow, and consumers pay attention to experience and differentiation. "Many companies that specialize in commercial real estate do not do well in other places, but they do well in Shenzhen."

Real estate companies deploy commercial projects

In recent years, the Shenzhen commercial real estate market has become fiercely competitive, especially in 2017, which was a year of change for Shenzhen's commercial real estate.

First of all, the quantity and quality of commercial real estate have increased. According to statistics from Winshang.com, there were 15 newly opened shopping malls in Shenzhen in 2017, with a commercial volume of 1.45 million square meters. This year, commercial flagship projects such as Vientiane World and One Square City were launched. Raffles City, CapitaLand's first commercial project in Shenzhen, was launched, community commercial Zolu Hongwan Shopping Center officially opened, and Dapeng and Pingshan ushered in their first commercial complexes.

Also in this year, Vanke became the cornerstone shareholder of SCPG, a commercial real estate operator in the same city. Since then, Vanke has established two commercial real estate investment funds, packaged most of its commercial projects to SCPG for unified operation and management, and built a Vanke commercial real estate operation platform as an important part of Vanke's urban supporting service ecosystem.

With the help of Vanke, SCPG has managed 126 commercial projects by 2018, covering 58 cities in China, with a total construction area of ​​more than 10 million square meters, second only to Wanda.

The Mixc City built by China Resources Land is known as the leader in China's shopping mall industry. As of 2018, the total construction area of ​​China Resources Land's investment properties in operation reached 9.21 million square meters, and its rental income reached 9.52 billion yuan.

As a listed company focusing on commercial real estate, Shenzhen Galaxy Properties is small and low-level compared with China Resources Land, but it has also begun to form its own development characteristics. In 2018, Galaxy Commercial Real Estate's service area exceeded 2.3 million square meters, and its projects have spread to Shenzhen, Guangzhou, Huizhou and other cities.

For real estate companies facing an incremental ceiling, commercial real estate is a huge investment opportunity, but investment is only the first step. How to achieve real asset appreciation is the core of the future.

Rapid iteration of urban shopping coordinates

For old Shenzhen residents, from the early department store era of Dongmen to Huaqiangbei Department Store, to the shopping mall era led by iconic shopping malls such as Mixc, COCOPARK, Yitian Holiday Plaza, and Coastal City, to the era of new city coordinates such as Mixc World, One Square City, and Shenye Uptown in recent years, Shenzhen’s commercial real estate projects have achieved rapid iteration from scratch to high-end.

For real estate companies, although Shenzhen’s commercial real estate development period is short, it has accumulated complete materials for China’s commercial real estate development. On January 18, 1985, Shennan Tianhong opened for business, officially starting the journey of Shenzhen’s retail industry. In July 1994, the Huaqiang North store of Wanjia Department Store opened and became a major customer flow center at that time. In 1996, Shirley Department Store launched Shenzhen's first single shopping mall with a business area of ​​over 10,000 square meters.

From the perspective of business formats, department stores integrate retail formats such as clothing, beauty, jewelry, and electrical appliances, as well as catering formats. However, they lack entertainment and leisure content and appear to be single.

By 2000, Causeway Bay Group creatively launched Cmall in Huaqiangbei, integrating shopping, catering, leisure and entertainment, and it began to take shape as a shopping mall. The Cmall model later spread across the country, and the concept of "commercial real estate" began to emerge.

What really hit people’s hearts was the debut of MixC in 2004. It adopted the store combination of “main store + sub-main store + specialized store”, with 4 main stores and nearly 300 well-known domestic and foreign brand specialized stores, which suddenly brought consumers into a new consumption era.

After that, Galaxy COCOPARK in the Shenzhen CBD area and Nanshan Binhai Shopping Center Coast City opened in 2006 and 2007, further changing the consumption patterns of Shenzhen citizens.

The lack of commercial atmosphere in the original Guanwai area has also begun to make up for it. In recent years, with the integration of the original customs inside and outside the city, Shenzhen's "expansion from the east to the west" and the advancement of the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, Shenzhen's urban construction has continued to expand, the gap between districts has narrowed, and benchmark commercial projects have emerged one after another, forming a new business pattern of "one city, multiple cores".

In 2018, 16 new commercial projects were opened in Shenzhen, adding more than 1.1 million square meters of commercial space. From the perspective of business formats, commercial complexes have entered a space where life and leisure experience are the main focus.

New consumption hotspots are beginning to emerge

Rich market experience, diversified competitive landscape, sufficient customer and logistics traffic, and sufficient business talents provide conditions for real estate companies to enter Shenzhen commercial real estate.

According to the judgment in China Resources Land’s 2018 annual report, investment properties represented by shopping malls are its key development business sector, and the next two to three years will still be the peak period for the operation of new shopping malls.

Reporters found that Shenzhen Mixc, which has been in operation for 14 years, had an assessed value of 9.032 billion yuan in 2018 and a rental income of 1.017 billion yuan, an increase of 9.5% from 2017. The average occupancy rate has remained at 99.5% for two consecutive years. Shenzhen Vientiane World, which has only been open for one year, recorded rental income of 373 million yuan in 2018, an increase of 496.4% from the previous year, and the average occupancy rate reached 96.9%.

"Commercial real estate requires business management skills. It is necessary to study customers, study the market, and grasp the subtle changes in customer needs. These are the most important." Li Yujia believes.

With the continuous growth of the younger generation of consumers, the experiential economy is now becoming popular. Commercial projects are gradually no longer dominated by "Big Mac", and "small but beautiful" regional and community-based businesses are becoming more and more popular.welcome. Small and medium-sized commercial projects under 100,000 square meters have become the favored objects of major developers and the younger generation of consumer groups because they are more flexible in investment promotion, more convenient in management, and more personalized in business formats.

How will commercial real estate develop in the future? Some experts believe that the consumption trend in shopping malls will be biased towards the post-95s and post-00s groups, and the pet economy, children's economy, and Internet celebrity economy may become consumption hot spots.

The reporter visited many shopping malls in Shenzhen and found that, in addition to some commercial landmarks and world-renowned brand flagship stores, ordinary commercial space operations are very different from the past. They have youthful and personalized characteristics in terms of space design and service experience. Commercial spaces with group identity or cultural connotation and social attributes are more popular. New tea shops such as Naixue's Tea and Heytea have been introduced in many shopping malls as "promoters" to attract customer flow.

Li Yujia speculated that shopping malls that traditionally focus on single shopping will become increasingly deserted. In addition to cultural attributes and social attributes, stores with strong new retail smart experience functions will also attract attention.