Guangzhou GDP growth is estimated to be at 8.3% for 2014 (2013: 11.6%), against the national level of 7.2% (2013: 7.7%) over the same period, hence tracking a slower national economic growth. Social retail amounted to RMB 574.3 billion during the first nine months of 2014, up 12.5% Y-o-Y. Riding on the traditional shopping season, retail sales in the city improved in the second half of 2014. A stable retail sales growth is expected to be seen in 2015, lending a solid support to the further development of the city´s retail property market.
The vacancy rate at shopping centres is estimated to be at 12.5% in 2014 (2013: 12.7%). The vacancy rate is likely to remain stable at above 12% in 2015 (five-year average: 12.1%), since most landlords have already taken rental or free-rental period concessions for their projects located in emerging areas like Panyu and Baiyun districts. District-wise, Yuexiu posted the lowest vacancy rate of just 5%, whilst Panyu saw an astonishing high vacancy rate of 29% in 3Q 2014. However, successful opening of new projects (especially in emerging areas) may help prevent the risk of increased vacancy rate in these areas.
Average rent in the city may continue to be dragged down by lower rent in other districts at around RMB 700–RMB 720 per square metre in 2015. Sources report that the average rental rate in Tianhe district is ranked at the top, at around RMB 1,100 per square metre. In contrast, Panyu, Baiyun and Haizhu stay at the lower range of RMB 200–RMB 500 per square metre per month on continued high supply.
Due to surging sales in online shopping, competition among shopping centres will be extended into the year 2015. In fact, we have already seen some landlords reviewing and fine-tuning their tenant mix since last year. On the other hand, driven by the increase in population and consumption capacity in non-core areas, a couple of developers have already planned to build large shopping centres in emerging districts to tap the market, leading to a healthy development of the overall Guangzhou retail property market.