“While new projects are taking longer to lease, improving consumer sentiment and brand innovation are laying the foundations for a stronger recovery.”

JAMES MACDONALD, SAVILLS RESEARCH



New Projects Navigate Leasing Challenges

• Retail sales fell 1.0% YoY in the first two months of 2025, with wholesale and retail down 0.5%, and accommodation and F&B declining 4.3%.

• Only one new project was launched within the Outer Ring Road in Q1/2025, adding 110,000 sqm of retail space. 

• Citywide vacancy rates edged down 0.1 ppts QoQ to 11.3% and 0.3 ppts YoY. Prime area vacancy rose 0.5 ppts QoQ to 9.1% but fell 0.4 ppts YoY. Non-prime vacancy dropped 0.3 ppts QoQ and YoY to 11.7%. 

• First-floor rents fell 0.4% QoQ to RMB24.2 psm pday in Q1/2025, down 2.6% YoY. 

• Luxury brands continued to invest in large-format stores and upgrade flagship locations in core areas despite the more challenging environment. 

• Several outdoor sports brands opened first or flagship stores in Shanghai, reflecting a shift from broad appeal to greater specialisation. 

• Eight additional projects are expected to launch in the remainder of 2025,