Here’s why Capitaland Retail China Trust’s Beijing properties’ occupancy rates are dipping

A supply injection is on its way.

Capitaland Retail China Trust’s prime locations have been exhibiting its weakest performance in China’s capital, with its occupancy rates down to 94.2%.

According to a report by OCBC research, mall occupancy rates in Beijing decreased to 94.5% city-wide at the end of 1Q, while tenants’ sales had clocked a mild growth of 1%.

OCBC added that shopper traffic fell 1.4% YoY, while overall portfolio committed occupancy fell 0.5ppt to 94.6%.

“Beijing’s prime locations experienced the weakest performance, down 1 ppt to 94.2% for the quarter, mainly due to ongoing branding readjustment strategies being undertaken by several projects,” OCBC said.

Meanwhile, the remainder of 2016 will see an influx of supply in the Beijing market, with the scheduled launch of eight more mid- to high-end shopping malls adding approx. 590,000 sq m, of retail GFA or a 5.6% increase over the current stock of 10.47m sq m., OCBC said.

“During the quarter, only one new project entered the retail market, BHG Shopping Mall in the Pinggu district, adding 59,000 sq m of retail GFA to the market,” OCBC added.