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PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
BUSINESS REVIEW
Perennial Qingyang Mall is now connected to the
Zhongba Subway Station which commenced operations
in December 2015. The new retail shops along the
pedestrian link way between the mall and subway station
have also started trading. The mall’s popularity as one of
the top one-stop family shopping and dining destinations
in western Chengdu is set to grow.
In Foshan, the government has recently announced that
the planned Foshan Subway Line 6 will connect to the
Guangzhou Subway Line 5. Perennial Jihua Mall, which
is expected to be connected to the new Guilan Road
Subway Station to be served by Foshan Subway Line
6, will benefit from the expanded shopper catchment.
Strategic Priorities in 2016
This year, the focus is on optimising and driving the
performance of the operating assets in Shenyang,
Foshan and Chengdu to strengthen the income stream.
Much emphasis will also be placed on completing the
construction works at PIHMH and Chengdu Plot D2 so
that the spaces can be handed over to tenants for fitting
out works.
With Perennial’s developments in China strategically
located in well-connected gateway cities and provincial
capitals, our recognition as a leading integrated real
estate developer is growing from strength to strength.
Perennial remains committed to growing our presence in
China and will continue to develop quality and innovative
integrated developments that effectively meet the needs
of the people, and in so doing, create value.
Market Review and Outlook
In 2015, China’s GDP grew 6.9% YOY
9
. The country’s
main economic goal in 2016 is to achieve a soft landing
and a smooth transition to a “new normal” that will allow
for slower but more sustainable growth. This will be fuelled
by continual expansion in domestic consumption, and
will feature an increasing focus on high-value activities,
rapid urbanisation and favourable government policies.
Although the threat of excess supply in the property
market exists, China’s key cities possess the fundamentals
to deliver sufficient demand to support the absorption of
supply and maintain growth of the real estate sector. The
China market thus still presents attractive opportunities
for investment, but requires increasingly robust strategic
planning and disciplined execution
10
.
Chengdu
11
In 2015, Chengdu’s Grade ‘A’ office market remained
stable compared with 2014. Demand was mainly driven by
the financial services and information technology sectors,
and emerging areas outperformed the primary city market.
A flux of newsupply in2015 created increasing competition
amongst landlords for office tenants, resulting in an
increased overall vacancy rate and a slightly lower average
rent. Such competition may continue in 2016, if 12 new
Grade ‘A’ office projects are completed as planned,
adding approximately 10 million sq ft to the market.
Despite the intensifying competition, average rent
is not expected to fall significantly as the maturing
commercial infrastructure and government support for
providers of modern services, such as e-commerce,
logistics, finance and technology services, will continue
to drive demand. Landlords are expected to introduce
value-added services to attract new or retain existing
tenants, instead of relying primarily on traditional rental
incentives. Overall, Chengdu’s Grade ‘A’ office market
is expected to remain stable.
In 2015, Chengdu’s retail property market remained
stable with no significant fluctuations on average
vacancy rate compared with 2014. Fast fashion, F&B
and entertainment sectors are expected to continue
expanding in 2016.
9 Source: National Bureau of Statistics of the People’s Republic of China (January 2016).
10 Source: JLL: China 60: From Fast Growth to Smart Growth.
11 Source: Colliers International: Chengdu Property Market 2015 Review and 2016 Outlook.
