APPD Market Report Article


February 22, 2024

Daniel Yao, Head of Research, China


RMB 1.57


Demand further strengthens in the fourth quarter

  • Net absorption in Shanghai’s logistics market rose to 234,000 sqm in the quarter, bringing the full year total to 497,000 sqm. As a result of the quarter’s takeup, vacancy rose only 0.1 ppts q-o-q to 15.0%, despite the delivery of two large new projects. 
  • Submarket performance continued to diverge, with elevated vacancy in areas with new completions such as Jinshan. Overall demand was led by 3PLs, with one well-known domestic 3PL leasing 18,000 sqm in Songjiang and another taking 3,500 sqm in Qingpu.

Annual supply reaches new record

  • With two projects totalling 285,000 sqm completing in the fourth quarter, Shanghai saw over 1 million sqm of new supply delivered in 2023 as a whole, setting a new annual record. Blogis completed an 85,000 sqm project in Baoshan, the submarket’s first new project since 2016. New Ease also delivered the 200,000-sqm Galaxy Phase 2 in the quarter. 
  • The Qingpu, Songjiang and Jinshan submarkets felt the brunt of the year’s supply pressure, with 85% of the annual new GFA. This concentration of new supply further contributed to diverging rent performance across submarkets.

Rent performance flattens as supply wave continues

  • The year’s record supply contributed to limited rent growth in the fourth quarter. Rents grew only 0.1% on a like-for-like basis over the quarter (up 1.0% y-o-y). Spot rents remained at RMB 1.57 per sqm, per day. Landlords in submarkets with continued large supply have grown flexible on rents, in order to fill vacancies. 
  • No investment transactions were closed in Shanghai over the quarter. Investors are being more selective about assets and transactions, taking longer to finalise decisions. That said, top-tier markets like Shanghai remain preferred destinations for both domestic and offshore investors. 

Outlook: Supply wave to carry through 2024

  • The supply wave that made 2023 a record-setting year is expected to persist into 2024, with annual supply expected to grow further to 1.6 million sqm. In addition to more new completions in western submarkets, areas like Fengxian and Lingang will also see new projects.
  • Domestic stimulus measures coupled with the global economic recovery are expected to support a further rebound in consumption and logistics demand. However, with supply expected to remain large, rent growth may remain under pressure. 

Note: Shanghai Logistics & Industrial refers to Shanghai's modern warehouse facilities.

Talk to us 
about real estate markets.