Retail is Recovering and Diversifying

Insights & Recommendations

• Leasing demand in shopping malls was driven by experiential retail formats and new types of stores, such as lifestyle collection 
stores and multi-function shops. We forecast large, non-prime new supply to limit Shanghai’s average rental growth in H2 2021. 
• In H1 2021 retail property was under-supplied in Tier II cities supply as local economies continued to grow rapidly. We recommend landlords actively prioritize foreign luxury brands and well-known fashion brands to upgrade their tenants’ profile.

H1 2021 highlights

• Offline consumption picked up in H1 2021, especially in F&B, as consumers returned to socializing. Lifestyle collection stores, typically located on the first floor, expanded rapidly as well and emerged as a major trend in Shanghai, Hangzhou, and Nanjing. 
• After active tenant adjustment, vacancy in Tier II markets remained below 5%.