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Rapidly Growing Digital Industry and Thriving Logistics and Retail Sectors Amid the New Consumption Era

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Rapidly Growing Digital Industry and Thriving Logistics and Retail Sectors Amid the New Consumption Era

Beijing

On April 7, the Management Committee of the Airport Economic Zone (Daxing) of Beijing Daxing International Airport and the Management Committee of the Daxing Airport Area (Beijing) of the Free Trade Zone jointly announced to promote the development of digital economy industry in the region. Management Committee planned to set up funds in the airport area of Daxing to resolve financing matters of innovative and start-up enterprises. In addition, a 250,000 sq m digital community is expected to be built to develop cross-border e-commerce, digital medical treatment, digital consumption, automatic driving and other relevant industries, all together promoting the development of digital economy industry.

Colliers’ View:

In recent years, Beijing's digital economy industry has developed rapidly. According to the Beijing Municipal Bureau of Statistics, the digital industry in Beijing reached RMB1.6 trillion in 2021, accounting for 40% of the citywide GDP. In September 2020, the Airport Area of Daxing Airport was promoted to be one of the three digital trade pilot areas in Beijing. Subsequently, a number of financial support measures were introduced to promote the development of digital economy industry. The proposed 250,000 sq m digital community is the first large-scale digital project to be built in the area. The combination of preferential policies and profound geographical location in addition to the construction of large-scale digital community will likely promote the demand data centers and industrial parks in the area.

Shanghai

On 8 April, Jiangsu Blogis bought Land Lot NIM-BWWL-08-05 in Nanjing’s Intelligent Manufacturing Industrial Park with a total consideration of RMB21.37 million, which translated to an unit price of RMB601,000 per mu. The land lot sits in the Intelligent Manufacturing Industrial Park, Hi-tech Zone, Pukou District in Nanjing. It abuts Xingzuo Road to the east, Huakang Road to the south, Blogis Logistics Park Phase III to the west, and Huabao Road to the north. According to the transaction announcement, the land lot has a total area of 23,713.61 sq m with a plot ratio ranging between 1.5 and 2. As an industrial use land, it is proposed to be built into an intelligent manufacturing and distribution centre.

Colliers’ View:

According to Blogis’ website, the company has developed two high-standard logistics parks known as Blogis Hi-tech Zone and Blogis Airport, with a total warehouse area of 316,000 sq m. The recent acquisition by Blogis indicates industrial giants’ continuous interest in tier-2 cities as well as some important node cities such as Suzhou, Wuhan, Langfang, Foshan, etc.

In recent years, logistics investment in the tier-2 and tier-3 cities has been relatively active, especially in satellite cities and node cities adjacent to tier-1 cities. Largely underpinned by advanced infrastructure, profound location profile and sophisticated transportation network, satellite cities and node cities continue to be popular as industrial giants seek to expand their footprints nationwide. Compared to tier-1 cities, satellite and node cities tend to have higher industrial land inventory, and more preferential policies for building large-scale modern logistics parks.

The thriving online retailing, biomedicine, intelligent manufacturing industries have all propelled the scaling up and upgrade of the logistics industry. Tier-2 and tier-3 cities in the Yangtze River Delta region has experienced strong growth momentum in the industrial economy and online retail sales, providing a solid foundation for the development of high-end logistics industry.

Greater Bay

On April 29, Spring REIT announced the acquisition of 68% stake of Huizhou Huamao Place. According to the announcement, completed in 2011, Huizhou Huamao Place is a 7-storey shopping centre (including a two-storey basement) with a total leasable area of about 107,000 sq m. As of February 2022, the average rent of Huamao Place was RMB143.54 psm per month (including property management fee) with the occupancy rate maintaining at 96.2%. The gross and net revenue of the property in 2021 were RMB218 million and RMB169 million respectively. Total asset value of the property agreed by the parties to this transaction was about RMB2.44 billion. The gross and net yield rate was 8.9% and 6.9% respectively in line with the agreed asset value. 

Colliers’ View:

Up to date, Huizhou has a total premium retail stock of 2.8 million sq m with 1.08 million sq m locating in Huicheng District. According to the seventh census data, Huizhou has a permanent population of 6.04 million, with a compounded growth rate of 31.45% over the past decade. Located in Jiangbei CBD submarket in Huicheng District, Huamao Place is a benchmark retail project, and has been maintaining high occupancy rate and stable rental growth since its debut. Over the years, with the continuous integration between Shenzhen and Huizhou, Huizhou has become an important hub city in GBA (Guangdong-Hong Kong-Macao Greater Bay Area). Additionally, continuous industry upgrade and infrastructure improvement allow Huizhou to capture spillover population from Shenzhen. Largely propelled by the retail development in Huizhou in recent years, Humao Place is expected to maintain stable rental growth and high occupancy rate. The acquisition of Huizhou Huamao Place by Spring REIT indicated investors’ positive sentiment and confidence toward premium retail properties in core cities of GBA.