CapitaLand Retail China Trust - Beijing retail outlook stable; re-iterate BUY
- Colliers’ Beijing Retail Report (Jan 2017) expects vacancy rates to stay at a low level of around 5% up to end-2017 and for rent to increase by 1.5% YoY by end-2017. They suggest that because of limited land supply and government restrictions on developing new shopping centres in major downtown areas, new supply growth is expected to slow in the following years and the market should continue to favour landlords.
- In 2016, Beijing’s GDP increased 6.7% while retail sales grew 6.5% to RMB 1,100.5b. Urban disposable income and expenditure per capita grew 8.4% and 4.4% respectively.
- CapitaLand Retail China Trust (CRCT) currently has three multi-tenanted malls and two master-leased malls in Beijing. Given the thus-far stable outlook for the Beijing retail market, we continue to find CRCT attractive at current price levels and reiterate our BUY rating with a fair value of S$1.56.