News release

Shanghai’s property market continues gradual recovery

According to JLL Shanghai 2023 Second Quarter Property Review and Outlook

July 12, 2023

Susan Yu

+86 6133 5797

Vickie Zheng

+86 6393 3333

Shanghai, July 12, 2023 – Shanghai’s commercial property market remained on the road to recovery in 2Q23, though some sectors rebounded faster than others amid persistent economic uncertainty. “Net absorption turned positive in the retail sector, showing that market activity is continuing to pick up from pandemic lows, particularly among F&B tenants,” said Anny Zhang, Managing Director for JLL East China and Senior Managing Director of China Leasing Business. “In the office market, tenants remain cautious when making leasing decisions. Combined with a large supply pipeline, this has led downward rental pressure to persist.”

  • Office Market: Absorption rose from first-quarter levels, though rents remained on a downward trend.

  • Retail Market: Net take-up returned to positive territory thanks to improved leasing from F&B and other tenants, while a lack of new supply helped vacancy to fall. 

  • Logistics Market: Stable performance in mature submarkets allowed rents to continue growing even as vacancy rose amid large supply.

  • Residential Market: Overall residential sales increased thanks to a rebound in new supply this quarter. Sales performance further diverged between projects.

  • Investment Market: Shanghai’s multi-family investment activity remained active. 

  • Hotels Market: Strong increments from ADR and occupancy were witnessed amid growing international tourism arrivals.

Grade A Office

Shanghai achieved 160,400 sqm of net absorption in 2Q23. Renewals grew more common amid a slow economy and market uncertainty. Net absorption in the CBD was 6,300 sqm, with headquarters demand in new projects balanced by conservative approaches from many tenants, with some even withdrawing spaces. Decentralized absorption reached 154,200 sqm. “Pre-commitments in new completions accounted for a majority of the quarter's take-up,” commented Joseph Wang, Senior Director of Office Leasing Advisory for JLL Shanghai. “This was particularly true for new projects in popular submarkets like Qiantan and Suhewan, as well as in projects that were willing to negotiate on rents and incentives.”

In the CBD, two projects added 104,000 sqm to the Changning district. CBD vacancy rose 1.1 ppts q-o-q to 11.9%. One of the new completions achieved strong pre-leasing, with several anchor tenants committing to spaces. In the decentralized market, six projects delivered more than 633,000 sqm, leading decentralized vacancy to rise 3.6 ppts q-o-q to 27.7%. New Bund Square City in Qiantan was sought after by tenants, while projects in Zhenru attracted cost-saving tenants as landlords proactively adjusted leasing strategies.

Overall rents continued to decline as tenants slowed their pace of leasing decision-making, impacting landlord sentiment. CBD rents fell 1.7% q-o-q, a result of cost-saving decentralization and renewal trends combined with a large expected supply. Many landlords have adjusted leasing strategies to maintain occupancy levels. In decentralized markets, rents fell 2.0% q-o-q. This quarter's supply surge put pressure on the rents of projects and submarkets suffering from high vacancy. Tenants favored projects whose landlords are willing to negotiate on rents or offer incentives to balance fit-out expenses.

Business Parks

Market expectations adjust as most tenants remain conservative. Market uncertainty led tenants’ leasing strategies to remain cautious. Landlord sentiment was impacted as leasing progress slowed further. According to Stephen Yu, Head of Business Park Services for JLL Shanghai Office Leasing Advisory, tech-intensive companies continued to drive demand. Leasing was strong among integrated circuitry firms and advanced manufacturing companies in fields like new energy vehicles (NEVs) and NEV-related upstream and downstream businesses. Two projects with a total GFA of 157,000 sqm entered the market. Shanghai’s overall business park vacancy rose 1.6 ppts q-o-q to 15.3%. Landlords have proactively adjusted pricing strategies to match the market’s slow pace of recovery and significant supply pressure. As a result, overall rents fell 1.7% q-o-q to RMB 4.5 per sqm per day. 


Retail footfall and consumption remained on a modest recovery trend. Food and beverage tenants led the recovery, with commodity retail sales also gaining some momentum. Retail leasing improved as a result, with Shanghai's net absorption returning to positive territory with 169,000 sqm. “In addition to continued expansion by F&B tenants, this quarter we also observed fashion and lifestyle retailers regaining confidence,” commented Neo Huang, Head of Retail Agency Leasing for JLL East China. There also was significant demand from sportswear and sports equipment brands, skincare and perfume brands, emerging designer fashion brands, new energy vehicle (NEV) showrooms, and smart home device retailers.

No new supply was delivered in Shanghai's urban area this quarter. Prime vacancy dropped 1.0 ppts q-o-q to 13.4% on the back of improving leasing momentum from retailers. Meanwhile, many brands remain selective about site selection and prefer prime projects in key locations. Decentralized vacancy fell 1.2 ppts q-o-q to 12.1% in 2Q23 thanks to notable occupancy improvement in malls that had been hit hard during the pandemic. With landlords offering significant rental concessions, vacant spaces were backfilled quickly.

The decline in prime ground floor rents decelerated 0.1 ppts to leave rentals down 0.3% q-o-q in 2Q23. Brands prefer projects in prime locations but are constrained by tight rental budgets. Decentralized rents fell 1.3% q-o-q as competition remains strong and landlords continue to compromise on rents to attract and retain tenants.


After showing signs of recovery in the first quarter, leasing demand was subdued in 2Q23 with net absorption of 15,000 sqm. “Although tenants adopted conservative strategies for their leasing footprints, preferring to renew current leases, they were still assessing current leases and watching closely to the market condition,” said Richard Huang, Senior Director of Logistics & Industrial for JLL China. New supply contributed to a rise in vacancy to 13.8% at the end of the quarter. While overall demand was muted, some 3PL firms continued to expand. For example, a local 3PL leased 9,000 sqm in the Qingpu submarket.

Shanghai's logistics market saw two new projects add 421,000 sqm this quarter, exceeding the total space delivered over all of 2022. ESR Qingpu Yurun was the larger project, delivering 346,000 sqm to Qingpu submarket. In addition, a local developer completed a 75,000 sqm project in Lingang. Supply is expected to remain large in 2H23 with five projects totaling436,000 sqm. Combined with stock completed in recent quarters, the new supply is expected to contribute to pressure on vacancy and rents in submarkets like Qingpu, Jinshan, and Songjiang.

Rental performance diverged across submarkets. While stable and mature submarkets saw continued rental growth, markets facing supply pressure experienced softer rental performance. Overall rents continued to rise, though at a slower pace. Rents edged up 0.2% on a like-for-like basis to RMB 1.58 per sqm per day.


Shanghai's primary mass-market home sales increased 6.1% q-o-q to around 2.7 million sqm, thanks to a rebound in new supply this quarter. Nevertheless, 2Q23 saw Shanghai's homebuying sentiment moderate since much pent-up demand was already released in 1Q23, and sales performance further diverged across new projects. Among the quarter’s new launches, projects with larger unit sizes and prime locations were well received by upgraders. High-end sales momentum was resilient overall, with 1,164 high-end units registered as sold, up 65.6% from 1Q23.

The pace of new project launches picked up over the quarter, leading to around 2.8 million sqm of new supply being launched, up 53.8% q-o-q and 159.1% y-o-y. The quarter saw six new high-end projects launch 1,389 units for pre-sale, up 564.6% compared to the preceding quarter. 

Primary prices edged up a further 0.6% q-o-q to RMB 132,252 per sqm, a result of relatively looser price caps. In the secondary market, however, economic uncertainty led more buyers to adopt a wait-and-see attitude, resulting in fewer inquiries and impacting individual owners' confidence. As a result, secondary prices fell 0.9% q-o-q.

“We expect buying sentiment to remain moderate amid continued economic uncertainty and tight local housing policies,” said Sherril Sheng, Research Director for JLL China Residential Sector. “That said, high-end projects with good value will continue to be favoured by upgrade buyers.” Primary prices are expected to continue to climb modestly in the near term as price caps remain loose. On the other hand, the fall in home transactions in the secondary market will continue to weigh on the recovery of secondary price.

Capital Markets

The first half of 2023 saw Shanghai's investment activity moderate with transaction volume reaching RMB 36.5 billion, down 13.5% from the same period in 2022. Transaction volume for the second quarter was RMB 10.4 billion, slowing from 1Q23. Most transactions in 2Q23 were in office and multi-family assets, which respectively accounted for 43% and 36% of the quarter's total transaction volume. In other sectors, business parks represented 16% of transaction volume while retail assets accounted for 5%. 

Soft leasing in Shanghai's office sector meant that self-use owners remained the key buyers of office assets in the second quarter, with firms in the renewable energy, technology, and life science sectors particularly active. Head of JLL Capital Markets East China Ling Sun remarked, "Investment activity in the multi-family sector remained active this quarter, and we saw clear segmentation among multi-family buyers. In addition to conventional white-collar rental apartments, blue-collar rental assets have begun to emerge as an alternative asset class." Multi-family transactions accounted for 36% of 2Q23's total transaction volume as well as 26% of the quarter's total deals. In addition, the quarter also saw transactions completed for three business parks and two retail assets. In terms of buyers, domestic funds remained the main driver of investments this quarter, while foreign investors maintained more cautious attitudes. 

The sharp rebound in business travel and tourism demand in the first half of 2023 is helping boost investors' confidence in hotel assets, particularly in robust markets like domestic gateway cities and resort towns. As a result, we expect to see a number of hotel assets transacted over 2H23. 


In the second quarter of 2023, monthly international tourism arrivals have grown rapidly. Shanghai welcomed 294,800 international visitors in May, 38% of 2019’s same period. There were 917,600 international visitors from January to May, 26% of 2019’s same period. As of May 2023, ADR of upscale hotels increased by 30.6% y-o-y to RMB 1,007, occupancy increased by 11.4 percentage points y-o-y to 63% and RevPAR increased by 90.8% y-o-y to RMB 633.

Performance in Shanghai’s upscale hotel market rose rapidly. Compared to the same period in 2019, RevPAR from January to May 2023 reached an 85% index compared to its 2019 level. Strong increments from ADR and occupancy were witnessed, recording 93% and 91% of recovery from 2019 levels

Two luxury hotels opened in the second quarter of 2023. They are the Shanghai Harbour Lake InterContinental Hotel (281 rooms) and the Artyzen Habitat Taopu (212 rooms). The Harbour Lake InterContinental Hotel is an upgraded renovation project. Since March 2022, the former Harbour Lake Crowne Plaza Hotel, which has been in operation for ten years, has officially shut its door for upgrade and renovation. While retaining the original building body, the hotel has undergone comprehensive renovations, and opened as a luxury brand, InterContinental, in late April this year. As some projects are postponed to 2024, there will be 859 hotel rooms entering the market in the next two quarters, including the 143-room Kimpton Bund Shanghai and the 384-room Sofitel on the North Bund (from Jiulong Hotel, an independent brand).

According to Tao Zhou, Managing Director of Hotels and Hospitality Group for JLL Greater China, “Shanghai has started welcoming oversea visitors, pushing the hotel industry by leaps and bounds. In addition, Shanghai ’s MICE business continues to rebound.”

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit