Summer holiday consumption helps stabilize leasing market sentiment

• Driven by the summer family outings, consumption in dining, entertainment, and personal care maintained steady growth. Thus, retailers operating in these segments were most actively engaged in business expansion, collectively securing over 55% of newly leased space.
• Sports consumption enthusiasm persisted, spurred further by local government-issued special coupons. More international sports brands expanded in top-tier malls, including Montbell making its Guangzhou debut by opening two stores successively.

Vacancy moderately rises with the launch of one new project

• In the urban market, vacancy rates remained largely stable for most projects, though some underperforming ones saw continued increases. With no new supply, the downtown vacancy rate rose slightly by 0.2 ppt to 5.9%.
• K11 Select was completed in Panyu, targeting young families with a diverse mix of dining, trendy fashion, lifestyle, and children’s entertainment. Amid stable occupancy in most existing projects, the new supply increased suburban vacancy by 0.5 ppt to 4.5%.

Rental decline slightly moderates as landmark projects show resilience

• Fuelled by holiday spending, most retailers maintained stable operations with few closures. Though some malls with weak leasing conditions proactively cut rents, overall citywide rent declines eased slightly compared to prior quarters.
• Continuing the previous quarter’s trend, core projects kept optimizing tenant mixes and refining floor plans. By replacing a portion of anchor stores with more trend-driven tenants, these projects successfully enhanced rental income.

Outlook: Experience-based sectors are set to strongly bolster offline consumption

• Expected government measures, such as seasonal tourism subsidies and dining vouchers, will continue to support stabilize consumption market sentiment. Dining, service, and other experience-based sectors are supposed to see consistently steady leasing intentions.
• Guangzhou’s new supply is projected to focused on emerging precincts in urban market in the coming 12 months. Vacancy rate is forecasted to climb, and rents may keep the downward trend amid the market competition.