Overall leasing demand remains moderate in 2024

• Net take-up in Shanghai’s urban area reached 157,000 sqm in Q4 2024, a decline from 343,500 sqm in the previous quarter. The total net take-up for the year was 451,400 sqm, reflecting a slowdown compared to 2023.
• New leases in 2024 primarily came from sportswear, domestic fashion brands, collectable toys, ACG products, lifestyle products, immersive experiences, art and culture exhibitions, pets-related services and products, affordable dining, bakeries and beverages.

Seven new projects reach completion in Q4 2024

• Three prime projects and four decentralised projects contributed a combined retail GFA of 287,000 sqm to the Shanghai retail market. In 2024, three prime malls and nine decentralised malls delivered a total retail GFA of 714,000 sqm.
• The prime vacancy rate rose by 1.2 ppts to 9.1% in Q4 2024, primarily due to tenant adjustments in several prime projects. Meanwhile, the decentralised vacancy rate rose by 0.4 ppts q-o-q to 13.1% in Q4 2024, attributed to pre-leasing challenges faced by new projects.

Average rents decline further under market pressure

• Rents declined as landlords offered more concessions to retain and attract tenants. In Q4 2024, average ground floor rents in prime areas dropped 2.8% q-o-q to RMB 44.2 per sqm per day, while rents in decentralised areas dropped 3.7% q-o-q to RMB 15.5 per sqm per day.
• In 2024, average prime rents declined 5.2% y-o-y, while decentralised rents decreased by 7.5% y-o-y. The decentralised area continued to face challenges in 2024 due to increasing market competition.

Outlook: Intense competition continues to pressure the market

• We expect project performance to further diverge. Sportswear, trendy fashion brands, ACG products and collectible toys are expected to remain popular, driving active store expansion.
• Rental performance is expected to remain weak in 2025 in a tenant-favoured market. However, the decline in rents is anticipated to decelerate as we expect the government to issue more policies to boost consumer confidence.