F&B and electronics consumption show resilience

• During the Spring Festival, Guangzhou received 16.34 million tourists, up 5.1% y-o-y. The increased consumer footfall sustained F&B leasing activity at a relatively strong level, accounting for approximately 40% of the newly leased area.
• Fuelled by the trade-in subsidy policy, the RMB 1.02 billion revenue generated from digital product purchases, particularly smartphones, in February also injected momentum for new consumer electronics demand, with this segment’s newly leased area up by 3 ppts q-o-q.

Vacancy remains stable with no new supply

• No new projects were delivered in Q1 2025.
• The urban vacancy rate saw a slight drop to 4.8%, down by 1 ppt q-o-q, whereas the suburban vacancy held at 3.0% q-o-q. F&B tenants helped malls with an effective absorption of vacancy within the quarter.

Rent decline widens marginally

• Post-holiday retail momentum in March showed signs of moderation. Market participants remain cautious, awaiting clearer indications that recent government stimulus policies will reignite broader consumer confidence and catalyse a sustained recovery in retail activity.
• Amid recovering demand, landlords were more flexible in lease negotiations in exchange for relatively stable occupancy. Urban rents have declined by 2.4% q-o-q, while suburban rents have experienced a 3.5% drop in the same period.

Outlook: More preferred policies are expected to boost leasing momentum

• The 2025 government work report emphasised boosting consumption with a 30-measure plan. Sectors to align with policy priorities and consumer lifestyle changes are poised for growth, supporting retail leasing demand.
• In the next 12 months, four premium shopping malls will be completed. While new supply is moderate, leasing demand may lag behind policy impact, keeping rents under near-term pressure.