The retail property market in Shanghai gained pace in Q3 despite ample new supply, as per the latest findings from real estate consultancy Savills.

Across the city, first-floor rental prices rose 0.4% on average from the previous quarter to 26.1 Yuan (US$4.1) per square metre per day between July and September, according to Savills’ latest quarterly report. This represents 0.7% growth year-on-year.

"Despite the addition of many new projects, average vacancy rates at local shopping malls remained unchanged at 9.2% in the third quarter of 2021, or down 2.4 percentage points year over year," according to Elle Xu, senior manager of research at Savills China. "Tenants from the service sector, among others, have been a key driving force of demand, accounting for 31% of newly leased areas in the third quarter, or 39% of space leased in newly completed projects."

Over the last quarter, six new projects were introduced on to the market, adding around 560,000 square meters of new retail space to Shanghai, amounting to total retail property stock of 14.4 million square metres by the end of September.

Another report compiled by JLL revealed overall net take-up at shopping centres surpassed 524,000 square meters in Q3: "Luxury brands accelerated their expansion with a focus on flagship stores, new concept stores, and pop-up stores," said Paige Chuang, head of retail agency for JLL Shanghai. "More high-end skincare, perfume, and make-up brands made their debut in Shanghai while improved leasing was also driven by auto showrooms, experiential indoor sports, chain restaurants, and coffee and dessert shops."

Furthermore, the JLL findings showed prime vacancy declined 0.3 percentage points quarter-on-quarter to 9.7%, whilst rates in decentralised locations edged down 1 percentage point to 9.3%.

Savills forecasts around 551,000 square metres of new retail space will be released into the local market in Q4.