Supportive policies continue to facilitate the recovery of leasing activities

• Sportswear, collectible toys, pet services, and entertainment sectors remained active amid evolving consumer trends. Meanwhile, trade-in incentives and rapid technological advancements have bolstered leasing momentum for consumer electronics and home appliances.
• Despite no new completions, the Shanghai urban area still recorded 105,500 sqm of net absorption in Q3 2025.

No new supply is recorded in the Shanghai urban area

• In Q3, vacancy rates fell 0.8 ppts q-o-q to 8.8% in prime areas, driven by increased brand interest in opening flagship stores to showcase brand culture and deliver unique experiences. Meanwhile, the decentralised vacancy rate fell 0.6 ppts q-o-q to 13.5% in Q3.
• The resurgence in inbound tourism and rising domestic tourism drove notable growth in net absorption of key tourist areas, such as East Nanjing Road, Xintiandi, and Huaihai Road submarkets.

The downward rental trend persists in Q3 2025

• Landlords prioritised occupancy with rental concessions and flexible terms amid competitive pressures. Therefore, average ground floor rents in prime areas declined 1.4% q-o-q to RMB 42.5/sqm/day and decentralised rents declined 1.9% q-o-q to RMB14.7/sqm/day in Q3 2025.
• In Q3 2025, the investment market saw the acquisition of MIX6, a community mall in a prime area, by a private enterprise for approximately RMB 500 million. The project, with a total retail GFA of 17,436 sqm, boasts an occupancy rate of over 90%.

Outlook: Policies to further underpin retail leasing momentum recovery

• China’s stimulus policies on service consumption, tourism, trade-ins, and personal loan subsidies are expected to boost consumption. We expect active leasing activities in sportswear, collectible toys, and consumer electronics sectors to continue.
• Over the remainder of 2025, five new projects are expected to deliver over 490,000 sqm to the market, with nearly 400,000 sqm in decentralised areas. We expect rents to continue its downward trend in 4Q25, although the pace of decline is likely to moderate.