Policy support continues to lift market sentiment, accelerating leasing recovery across key sectors

• In Q1 2026, policymakers rolled out reinforced measures, extending trade-in subsidies, introducing new consumption loan incentives, and expanding visa-free entry, to bolster retail-market confidence and stimulate sales growth.
• Leasing demand remains resilient across sportswear, collectible toys, consumer electronics, and affordable dining, underpinned by targeted policy stimulus, shifting consumer preferences, and improving consumer sentiment.

No new retail supply is recorded in Q1 2026

• More brands are choosing large-format stores in high-footfall prime locations to create immersive experiences and showcase brand narratives. This shift supported leasing momentum in prime areas, reducing prime vacancy rate by 0.3 ppts to 8.1% in Q1 2026.
• Conversely, decentralised areas are still contending with elevated vacancy rates and relatively cautious leasing demand. Landlords in these locations remain under pressure, with the vacancy rate edging up 0.2 ppts q-o-q to 13.5% in Q1 2026.

Rental declines narrow

• Rental declines moderated amid improving consumer confidence and steady leasing demand in policy-supported sectors. Prime ground floor rents fell 0.3% q-o-q to RMB 41.7 per sqm per day while decentralised rents declined 1.0% q-o-q to RMB 14.3 per sqm per day.
• In Q1 2026, Zheshang Jinhui Trust, a state-owned platform from Zhejiang Province, acquired the Zhuanqiao Wanda Plaza for RMB 2,048 million. The asset comprises a total retail GFA of approx. 146,300 sqm, reflecting a unit price of approximately RMB14,000 per sqm.

Outlook: Structural growth to persist through 2026

• Policy stimulus is expected to bolster consumer confidence and sustain leasing demand in key sectors such as sportswear, collectible toys, consumer electronics, and affordable dining.
• Shanghai’s retail market is set to receive over 648,000 sqm of new supply in 2026, prolonging the tenant-favourable conditions. However, well-located malls with strong tenant mix and experienced management are expected to outperform the market.