Weak consumption hindered brand expansion, yet segments are driven by emotional value

• Total retail sales of consumer goods recorded negative growth for the year (down 3.1% YTD), prompting a generally cautious approach to store expansion among brands and increasing the surrender pressure across traditional sectors.
• Fast food, IP-driven consumption, ACG and outdoor apparel continued to attract strong footfall, showing consumers’ preference for emotional consumption and experience-led offerings amid increased price sensitivity.

New supply was concentrated in the first half, with a notable slowdown in pipelines in the second half

• Total new supply in 2025 exceeded 800,000 sqm, roughly half of the 2024 total, yet still slightly above the 2022–2023 average, signalling a more rational supply pipeline.
• In the second half of the year, deliveries contracted sharply and were largely in the suburban market, creating a buffer for the absorption of existing stock in the urban market.

Downward pressure on rents intensified, with divergent performance among projects

• With tenant budgets tightening and market competition intensifying, net effective rents in the urban market declined by 2.5% q-o-q by the end of 2025, widening the annual y-o-y decline to 9.5%.
• Market yields in the urban market decompressed continuously during the quarter.

Outlook: Rents are expected to remain under downward pressure in the short term

• Looking ahead to 2026, a substantial recovery in consumer confidence will depend on broader macroeconomic stabilization and improving household income expectations.
• Core assets with superior locations and strong operating capabilities are already leading the market to a floor through brand refreshes and tenant-mix restructuring. Efficient operations and sharp market insight will drive Beijing’s retail market into a new era.