Will Xi’an Become the Next Luxury Hub in China?

What Happened: Swire Properties announced on March 4 that the fourth iteration of their retail development series, Taikoo Li, will land in Xi’an a world-famous ancient capital and the first city in Northwest China with a GDP exceeding RMB one trillion.

The Taikoo Li Xi’an project will be located in the Beilin District at the Small Wild Goose Pagoda historical and cultural zone (小雁塔历史文化片区), which has been acquired by the real estate group in partnership with a homegrown cultural investment and development company. The total investment for this new scheme is expected to be approximately RMB 10 billion, according to Swire Properties’ statement.

An urban regeneration plan will be implemented in the area to blend culture, history, heritage, and modern lifestyles. The site will be transformed into a retail-led project featuring a low-rise, open-plan architectural design comprising retail and cultural facilities, a luxury hotel, serviced residences, and business apartments. 

The Jing Take: Xi’an is one of the emerging Chinese cities that luxury houses cannot afford to overlook. Besides its cultural heritage, the city’s business potential has lured nimble domestic players. For example, SKP, which topped the country’s shopping mall revenue ranking, unveiled its second location in the city in 2018. As reported by the Beijing Business Daily, Xi’an SKP mall achieved revenue growth of 36 percent in 2020, which was even higher than its footprint in Beijing.

With the opening of the Taikoo Li complex, Xi’an is expected to attract more high-end fashion, beauty, and lifestyle brands. Distinct from traditional shopping malls, the Taikoo Li series has built a brand DNA rooted in local culture. Its renowned projects in Beijing, Shanghai, Guangzhou, and Chengdu have proven its authentic approach to revitalizing traditional regional culture. 

However, this is the first time that Swire Properties has bet its Taikoo Li project on an emerging region. Though Xi’an’s commercial potential is relatively substantial compared to other cities in the Northwest, its consumption has mostly been driven by tourism and travel. Its per capita disposable income in 2021 recording $6,126 (RMB 38,694) is much lower than Chengdu, let alone tier-1 cities like Beijing and Shanghai. As daily COVID-19 infections reach new heights nationwide, whether Xi’an’s consumption can be sustainably fueled by tourism is uncertain. Yet, Swire Properties has built a consistent retail brand in the mainland and offered unique spaces for luxury houses to engage regional cultures. While the future remains uncertain, their credentials are anything but. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Categories

Market Analysis, Retail