News release

Market starts 2022 on a strong note while Shanghai faces short-term challenges from local outbreak

According to JLL Shanghai 2022 First Quarter Property Review

April 14, 2022

Susan Yu

+86 6133 5797

Vickie Zheng

+86 (21) 6393 3333

Shanghai, April 14, 2022 – Shanghai’s commercial property market started 2022 on a strong note, though a local outbreak of Covid-19 dampened activities in some sectors since March. “Demand for office leasing in Shanghai continued to be strong in January and February this year from a range of companies, including manufacturing & trading and life science firms, along with companies in finance and professional services,” said Anny Zhang, Managing Director for JLL East China and Head of Office Leasing Adviory for JLL China. Vacancy fell in the retail market as the pandemic’s resurgence pushed the first quarter’s planned new supply to later in the year. Solid demand sustained the momentum of rental growth in the logistics sector. In the residential market, buying sentiment remained solid but sales activities were disrupted by the local pandemic outbreak. Investors have maintained their investment interest in rental housing, life science, and logistics.

Grade A Office

Though leasing activity faced disruption in March, overall net absorption in 1Q22 still reached 295,100 sqm, while CBD net absorption reached 43,500 sqm. In Puxi, there was active demand from a variety of tenant types, though net absorption was limited by scarce vacant space. “Pudong CBD contributed a large amount of Shanghai CBD net absorption,” said Joseph Wang, Head of Pudong Office Leasing Advisory, JLL Shanghai. “Domestic financial and professional service firms in Lujiazui and Zhuyuan remained active this quarter.” In the decentralized market, net absorption reached 251,700 sqm, with manufacturing & trading and life science companies contributing to leasing. In addition, some domestic financial and professional service firms sought opportunities to upgrade or expand into higher quality projects. However, the recent pandemic lockdown will hinder leasing activities and force companies to delay leasing decisions, likely causing downturn in new leasing demand.

No new projects reached completion in Shanghai’s CBD, allowing vacancy to continue decreasing. Vacancy in the Puxi CBD fell 0.2 ppts q-o-q to 5.8%, and upcoming projects there have received active pre-leasing. In the Pudong CBD, strong leasing momentum allowed vacancy to decline 1.0 ppts q-o-q to 8.9%. All three of this quarter's new completions were in the decentralized market. Despite the 233,200 sqm of supply, strong leasing and inquiries in a portion of the new projects led decentralized vacancy to fall 1.0 ppts q-o-q to 23.9%.

Rental growth continued up to the pandemic’s latest resurgence. In the Puxi CBD, rents rose 2.4% q-o-q amid strong landlord sentiment. Pudong CBD rents rose 2.0% q-o-q as the recovery improved and older buildings saw active leasing. In the decentralized market, multiple submarkets saw a recovery in performance, leading rents to rise 2.5% q-o-q. Looking ahead, we expect a short-term decrease in leasing demand caused by the pandemic, with rents also likely to face downward pressure.

Business Parks

Shanghai’s business park market saw strong activity prior to the March outbreaks of Covid-19, with overall net absorption of 82,000 sqm. Strategic emerging industries such as life sciences, semiconductors and advanced manufacturing continued to see leasing momentum. For example, ASCA Hynix Semiconductor Technology leased 3,300 sqm in SBP Phase III, and DJI expanded by 4,000 sqm in Changxing Mansion Phase I. Zhangjiang continued to see strong leasing inquires thanks to its mature industrial clustering and rich talent base, while Jinqiao and Zhoukang grew their presences thanks to spillover demand from Zhangjiang.

Only one project was completed during the first quarter, with a total GFA of 51,000 sqm. Projects approaching completion in Caohejing and other core business parks saw strong leasing momentum. With active leasing demand, the overall vacancy rate among Shanghai's business parks dropped to 10.4%. Overall rents rose slightly in the first quarter, increasing by 0.9% q-o-q to RMB 4.6 per sqm per day.


Consumer demand and overall retail leasing activities in Shanghai remained stable in the first two months of 2022, but faced disruptions in March due to new outbreaks of Covid-19 in Shanghai. As a result, Shanghai's urban area saw 46,700 sqm of net take-up in 1Q22, down from 95,000 sqm in 1Q21. “New take-up was mainly contributed by coffee, tea, and dessert shops, along with new energy vehicle showrooms, international skin care and perfume brands, and designer fashion brands,” said Paige Chuang, Head of Retail Agency for JLL Shanghai. In addition, new retail formats that combined sales and exhibition space for multiple brands also showed notable expansion. Looking ahead, we expect the pandemic containment measures will continue to affect retail businesses. Retailers will expand at a slower pace in the short-term, but their long-term expansion plans are not expected to be affected.

No new supply was delivered in the prime or decentralized markets this quarter. Some projects that had scheduled March openings delayed in the face of the local outbreak. Prime vacancy remained flat at 9.0% q-o-q. Decentralized vacancy fell from 9.6% to 9.2% q-o-q in 1Q22, mainly due to improved leasing progress in projects that opened in 4Q21.

With many deals closed by the end of 2021 and new deals for 2022 still under negotiation, there was limited movement in rents in 1Q22. Prime ground floor rents edged up 0.1% q-o-q to RMB 51.1 per sqm per day, while decentralized rents were largely flat at RMB 19.2. We expect to see pressure on vacancy and rents due to slower leasing momentum caused by the resurgence of the pandemic.


Overall leasing sustained its momentum in Shanghai's logistics market despite the recent Covid-19 outbreak. Net absorption reached 83,500 sqm over the quarter, leading the non-bonded vacancy rate fell from 9.7% to 8.5%. That said, market sentiment diverged across different submarkets. While East Shanghai submarkets such as PVG remained tight, some submarkets in West Shanghai faced potential pressure due to their sheer amount of expected upcoming supply. Meanwhile, some tenants were considering satellite cities as alternatives to the elevated rents in mature West Shanghai submarkets. “3PL companies continued to lead demand in 1Q22 as we observed large deals signed in submarkets like Fengxian and Songjiang,” said Richard Huang, Co-Head of Logistics & Industrial for JLL China.  E-commerce companies also were active this quarter. For example, a local e-commerce firm leased more than 10,000 sqm in the Qingpu submarket.

Though demand maintained its pace, supply paused this quarter with no new completions. A large number of projects remain scheduled to deliver over the remainder of the year, however, which could put upward pressure on vacancy. Seven projects totaling 803,000 sqm of logistics space are expected to deliver before the end of 2022.

Shanghai rents maintained their rising trajectory on the back of solid demand. Rents rose 0.7% q-o-q this quarter to RMB 1.54 per sqm per annum, with y-o-y growth of 3.8%. Rents grew in almost all of the city's submarkets.


Sales activities remained solid in January, but were affected by the Spring Festival holiday in February and the local rebound of the pandemic in March. Strong sales in January allowed Shanghai's primary housing market sales volume to still edge up 5.1% q-o-q to about 2.7 million sqm. High-end sales slightly declined 3.3% q-o-q to 1,069 units in 1Q22. That said, overall sentiment in the high-end segment remained solid as projects that launched in the first quarter received large numbers of buyers.

Following a supply wave in the previous quarter, 1Q22 saw mass market new supply moderate 10.7% q-o-q to about 2.7 million sqm, with a majority of new launches taking place in January prior to the Spring Festival holiday. In the high-end segment, six projects launched a total of 1,482 units, with average prices ranging from RMB 115,000 to RMB 132,000 per sqm. Among the new projects, four were located in the North Bund, an emerging business and high-end residential area that has been attracting a large number of businesses and talents.

Under continued price cap regulations, high-end primary prices stayed flat at about RMB 126,600 per sqm. Secondary prices stopped declining and edged up 0.4% q-o-q to RMB 105,000 per sqm, as upgraders were encouraged by easing monetary policies and a looser credit environment.

Shanghai's housing policy stance is expected to remain tight. Looser credit is expected to benefit both first-time homebuyers and upgraders, while investment demand will continue to face curbs. We expect stable sales momentum in the primary market over 2022, although the recent outbreak mean some sales activities planned for 1H22 may slip into 2H22. We expect high-end primary prices to be stable under price caps. After the local outbreak is contained, we expect secondary sales activities and prices to continue recovering over 2022 amid the looser credit environment. However, performance in secondary projects may further diverge as homebuyers pursue residential compounds with good quality and strong property management, which has been proven important during the recent outbreak.

Capital Markets

China’s property sector showed a series of positive signs of recovery following lower interest rates, shorter lending cycles, and a moratorium on property tax levies after the Two Sessions. Institutional investors awaiting a fire-sale from developers are left disappointed as assets sold at market price levels and SOEs awaiting acquisition opportunities.

Following this current outbreak of Covid-19, interest in rental housing (especially those that provide quality services) will continue to receive attention from investors. Another popular sector for investors is the biopharmaceutical industry since the pandemic outbreak in 2020.

The outlook for the logistics sector remains positive with demand for warehouses continuing. Investors are still looking to acquire logistics assets despite compressed yields. We expect a large number of logistics assets to be put up for sale in 2022.

Sun Ling, Head of Capital Markets for JLL East China said, “While 2022 will turn out to be an interesting year given the uncertainties under the current climate, investors have maintained their interest in rental housing, life science, and logistics. We expect that as the investment cycle of assets entered by investment institutions in the previous years draws to a close, a large number of assets will exit the market in the second half of this year, bringing more investment opportunities.”

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 98,000 as of December 31, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit