Retail rents maintain momentum

SHANGHAI’S retail property market continued to gain momentum over the past quarter despite abundant new supply, according to the latest research released by international real estate consultancy Savills.

First-floor rents edged up 0.4 percent from the previous quarter to an average 26.1 yuan (US$4.10) per square meter per day during July-September, extending gains for the third straight quarter, Savills said in its latest quarterly report. Year on year, that was a growth of 0.7 percent.

“Despite the addition of many new projects, average vacancy rates at local shopping malls remained unchanged at 9.2 percent in the third quarter of 2021, or down 2.4 percentage points year over year,” said Elle Xu, senior manager of research at Savills China.

“Tenants from the services sector, among others, have been a key driving force of demand, accounting for 31 percent of newly leased areas in the third quarter, or 39 percent of space leased in newly completed projects.”

The past quarter saw altogether six new projects added to the market, bringing some 560,000 square meters of new retail space to Shanghai, which by the end of September, had a total retail property stock of 14.4 million square meters within the Outer Ring Road.

Major new projects rolled out over the past three months include CapitaLand’s Raffles City The Bund, Shui On Land’s The Hall of Sun, both in Hongkou District, and Taikoo Li Qiantan, a 50-50 project by Swire Properties, and Lujiazui Group, in Pudong New Area, which altogether added more than 420,000 square meters in retail GFA (gross floor area).

A separate report by JLL found overall net take-up at local shopping malls exceeded 524,000 square meters in the third quarter amid continuously recovering leasing activity and strong performances in new malls.