“Amid macroeconomic pressures, consumers are spending more cautiously, prioritising value for money. Cross-category integration is a key focus, requiring new projects to align with market demand and testing the leasing capabilities of operational teams. ”

JAMES MACDONALD, SAVILLS RESEARCH



Social Entertainment Drives Leasing Demand

• Retail sales dropped 3.1% YoY in the first eight months of 2024, with wholesale and retail down 3.0%, and accommodation and F&B falling by 5.3%.

• Seven projects within the Outer Ring Road added 497,000 sqm of retail GFA in 2024, including 93,000 sqm in Q4/2024.

• Citywide vacancy rates fell by 0.3 ppts QoQ to 11.4% in Q4/2024, remaining flat YoY. Prime retail areas saw a 1.3 ppt QoQ drop to 8.7%, while non-prime areas stayed stable at 12.0%.

• First-floor rents declined by 1.2% QoQ to RMB24.3 psm pday in Q4/2024, marking a 2.2% YoY decrease.

• Diversified, specialised sports venues continue to enter shopping centres, while brands offering immersive exhibitions and interactive entertainment fill vacant units, simultaneously boosting footfall.

• Yunnan and Guizhou cuisine restaurants have gained popularity in shopping centres. Their blend of Chinese and Western elements, combined with a dining and drinking model, has boosted profitability by diversifying revenue streams.

• The Shanghai retail market is expected to see nine new projects launched in 2025, adding approximately 847,000 sqm of new supply.