Buoyant retail property market in 2016

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Shanghai's retail property market performed buoyantly in 2016 with ample supply and robust demand from both tenants and investors, Colliers International said in a report yesterday.

The net absorption of retail space, a measure of change in total demand, surged to 581,000 square meters last year, more than twice the level of 2015, the report said.

“Shanghai’s retail property market was active last year, mainly boosted by increasing retail sales which grew 7.8 percent in the first 11 months,” said Carlby Xie, director of research for Colliers’ China operation.

A large stock of new supply, however, did not impact the overall vacancy rate which edged up just 0.3 percentage points from 2015 to 12.1 percent by the end of last year. Fashion, particularly casual sportswear, food and beverage, as well as retailers catering to children and their needs spurred robust demand for both new and existing properties, according to Colliers International.

Landlords managed to achieve an average rental increase of 4.2 percent in 2016 from a year earlier, excluding the effect of new supply where opening rents are typically below the market average.

With the new supply included, the citywide’s average rent fell 4 percent year on year to 37.3 yuan (US$5.34) per square meter per day.

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