News release

Shanghai property market ends 2021 on strong note with historic demand across multiple sectors

According to JLL Shanghai 2021 Fourth Quarter Property Review

January 13, 2022

Anny Zhang

+86 (21) 6133 5427

Daniel Yao

+86 (21) 6133 5416

Vickie Zheng

+86 (21) 6393 3333

Shanghai, January 13, 2022 – Shanghai’s commercial property market consolidated its recovery from the pandemic over 2021, ending the year with strong momentum. “There was a clear rebound in demand this year, and we saw record-high absorption in the office and logistics sectors,” said Anny Zhang, Managing Director for JLL East China and Head of Office Leasing Advisory for JLL China.

Strong office market performance was driven by demand from an increasingly diverse range of tenant types, effectively reducing vacancy rate and supporting rental growth despite significant supply, particularly in decentralized areas. Business parks recorded their highest annual net absorption in the past five years thanks to active leasing demand from TMT and life science companies. Absorption in the retail sector rebounded strongly from negative levels in 2020 to nearly 1.5 million square meters in this year. New supply in logistics properties reached a record-high in 2021, but the vacancy rate increased only marginally supported by robust demands. Shanghai’s investment volume rose as investors continued to seek out office asset acquisition opportunities and directed their attention to the “New Economy” and alternative sectors.

Grade A Office

Overall net absorption reached 371,200 sqm in 4Q21 and totaled 1,506,000 sqm for 2021. Absorption in the CBD reached 412,500 sqm in 2021, driven mainly by demands for expansion from domestic financial services, professional services, TMT, and retail firms. In the decentralized market, net absorption reached 262,000 sqm in the fourth quarter and an annual total of 1,093,000 sqm. “In addition to domestic TMT companies that drove demand in the decentralized market, leasing deals from manufacturing and trading companies accelerated,” said Stanley Jiang, Head of Project Leasing for JLL Shanghai Office Leasing Advisory. “Furthermore, leasing demands coming from the healthcare sector also increased.”

No new project was completed in the CBD in the fourth quarter, and the active leasing market in Pudong CBD pushed vacancy down 1.3 ppts q-o-q and 4.0 ppts y-o-y to 9.9%. In Puxi CBD, strong leasing performance in core submarkets drove the vacancy rate down 1.7 ppts q-o-q and 4.9 ppts y-o-y to 6.0%. One decentralized project with a GFA of 51,000 sqm reached completion in the fourth quarter, contributing to a supply wave in the decentralized market that totaled around 955,000 sqm for full-year 2021. Supported by strong leasing momentum, the decentralized vacancy rate still edged down to 24.9%, down 2.9 ppts q-o-q and 5.5 ppts y-o-y.

Rents continued to increase as landlord sentiment improved. CBD rents edged up by 1.0% q-o-q and grew 1.7% over the year as a whole. The active leasing demand throughout the year drove Puxi rental growth of 3.3% y-o-y, while Pudong CBD rents remained largely stable over 2021. Rents grew 6.4% y-o-y in decentralized areas. Qiantan has a particularly strong performance.

Looking ahead, the financial services, professional services, and TMT sectors will continue to drive demand in the short term. In addition, “New Economy” sectors like advanced manufacturing and new retail will further drive overall demand. We also expect firms to seek standalone office buildings in decentralized markets for new headquarter locations. Rents are expected to continue rising over the short term, though large supply may act to constrain growth.

Business Parks

Overall net absorption reached 123,000 sqm in the fourth quarter and totaled 720,000 sqm for full-year 2021, a record-high annual total in the past five years. TMT companies remained the main driver of market demand, while demand from life science companies continued to increase. For example, Transsion expanded its leasing by 10,000 sqm in BJT Park in Zhangjiang submarket. As the development momentum of strategic emerging industries continues to grow, leasing demand from advanced manufacturing companies remains unabated. For example, UAES leased an additional 8,000 sqm in the 5G Innovation Robot Industry Park.

In terms of new supply, only one project was completed during the fourth quarter, with a total GFA of 58,000 sqm. With limited new supply and active leasing demand, the overall vacancy rate among Shanghai's industrial parks dropped to 10.8%, reaching a historical low. Overall rents continued to rise, increasing by 1.0% q-o-q to RMB 4.6 per sqm per day and by 3.2% for the year.


Retail net take-up reached 654,700 sqm in the fourth quarter and 1,481,700 for full-year 2021, a significant rebound from 2020. Leasing remained stable, driven by leasing demand from new energy vehicle (NEV) showrooms, luxury brands, sports apparel and equipment, experiential tenants, coffee and beverage chains, and more. According to Paige Chuang, Head of Retail Agency for JLL Shanghai: “While traditional experiential tenants like theaters and KTV remained cautious in their expansions, tenants from emerging categories such as role-playing escape rooms, cultural and artistic experiences, animal interaction stores, and children's indoor playgrounds.”

CITIC Square re-opened in the prime area in 4Q21 after completing an upgrade, delivering 34,500 sqm of retail GFA. With limited new supply and stable leasing demand, the prime area vacancy rate decreased by 0.7 ppts q-o-q to 9.0%. In full-year 2021, two prime malls delivered a total retail GFA of 104,052 sqm. Eight decentralized malls added retail GFA of 696,845 sqm in 4Q21. The decentralized vacancy rate rose by 0.3 ppts q-o-q to 9.6% in the fourth quarter, due to this large wave of supply and a slight slowdown in the leasing of existing projects. For the full year 2021, 13 decentralized malls added a total retail GFA of 1,302,261 sqm.

Prime ground floor rental growth decelerated to 0.3% q-o-q in 4Q21. Full-year rents were up 5.6% y-o-y thanks to strong sales performance and active expansion by luxury and high-end fashion brands in the prime area. Decentralized rental growth slowed to 0.4% q-o-q in 4Q21, with rents ending the year up 2.2%.

The overall retail leasing momentum may remain stable in 2022. Given uncertainty regarding the pandemic, retail net absorption in 2022 may slightly decline from high level seen in 2021. Meanwhile, market performance may further diverge. Five prime projects and fifteen decentralized malls are forecast to open in 2022. With stable demand and limited supply, prime vacancy is likely to remain low. While leading decentralized projects by recognized operators are likely to outperform, a large supply pipeline will put pressure on the decentralized market overall.


Net absorption for full-year 2021 reached a record-high of 660,000 sqm, despite only 80,000 square meters of net absorption in the fourth quarter. “End customers are more likely to constantly review the security and efficiency of the supply chain under the current exceptional economic environment, placing higher expectations on the intelligence, scale and flexibility of the 3PL service providers ,” said Richard Huang, Co-Head of Logistics & Industrial for JLL China. “On the demand side, 3PLs will continue to lead the demand for leasing of logistics properties in Shanghai, including new and renewed leases from domestic and international 3PLs.” For example, SF Express and Deppon Logistics both committed to New Ease Galaxy Phase 1 and 2 project in Jinshan.

Shanghai’s new supply of logistics space in 2021 also set a record-high with more than 900,000 sqm. The vacancy rate rose from 4.4% to 9.7% as a result of the fourth quarter’s significant new supply. Disregarding the impact of this quarter’s new supply, vacancy rates in other projects fell to 3.6%. In addition, the annual vacancy rate showed only a slight increase compared to 8.1% in 4Q20, reflecting strong rental demand throughout the year despite significant new supply.

Strong leasing momentum kept rents up despite a large new supply. Rents rose 1.1% q-o-q in 4Q21 and reached RMB 1.54 per sqm per day. For the full year, rents rose 3.7%, with all submarkets recording increases.

Looking ahead, traditional drivers like 3PLs and e-commerce firms will continue to drive Shanghai’s logistics demand. Meanwhile, demand for expansion from emerging industries such as cold chain and advanced manufacturing is expected to rise due to consumers’ rising expectations on food quality and the local government’s focus on high-end manufacturing. Although new supply in the coming year is expected to reach a similar level to 2021, strong demand is likely to continue fueling steady rental growth.


Primary mass market sales in Shanghai increased by 5.1% q-o-q to 2.5 million sqm in 4Q21, supported by a slight easing in mortgage policies towards the year-end. The year concluded with an annual sales volume of 10.7 million sqm, up 14.1% y-o-y. In the high-end primary market, solid upgrade demand and the launch of many new projects contributed to sales of 1,105 high-end units, up 45.4% q-o-q. Sales in the high-end segment totaled 3,244 units in 2021, a new record-high since 2017.

The fourth quarter saw a large volume of supply launch as developers accelerated new launches to achieve annual sales targets. In the mass market, new supply reached about 3.1 million sqm in 4Q21 and 8.1 million sqm for full-year 2021, up 4.5% y-o-y. In the high-end segment, ten projects launched 1,885 units in 4Q21, the largest quarterly supply observed in the past ten years. The new projects had average prices ranging from RMB 102,000 to RMB 165,000 per sqm, with most projects achieving high sales rates on the day of launch.

With price caps remaining tight, high-end primary prices rose only 0.1% q-o-q. Meanwhile, the high-end secondary market further cooled in the fourth quarter, with prices declining 1.2% q-o-q due to price verification policies and large new supply diverting buyers away from the secondary market. In the land sales market, 95 residential parcels were sold in 2021. With land premium rate caps, the average land premium rate was recorded at 6.15% in 2021, down from 13.7% in 2020.

Shanghai’s overall housing policy stance will remain tight in 2022, although marginally looser monetary policy is expected. We expect sales volume in the mass market to remain stable, underpinned by solid demand from first-time buyers and upgraders. High-end sales volume is likely to moderate due to a limited supply pipeline. Given continued price caps, we expect high-end primary prices to be stable with mild increases in 2022. Meanwhile, high-end secondary price growth is expected to stabilize after the slight dip of 4Q21, due to easing mortgage policies and limited primary high-end supply.

Capital Markets

China’s total commercial real estate transaction value reached RMB 225.3 billion in 2021. Asset types in the “New Economy” and alternative sectors – notably logistics and life science projects – continued to feature prominently on institutional investors’ wish lists. “In the first half of 2021, developers that face cash flow pressures selling assets in Shanghai, while self-use buyers also moved aggressively to seize acquisition opportunities,” said Sun Ling, Head of Capital Markets for JLL East China. In the second half of the year, investors devoted more attention to alternative investments. While office assets continue to make up the majority of Shanghai’s transaction volume, investors have had difficulty finding viable investment opportunities in non-core locations as the supply pressures weigh on investors' expectation.

Shanghai’s Zhangjiang submarket became one of the most active submarkets, seeing six asset transactions over the past twelve months as investors capitalized on favorable market conditions and the submarket’s strong clustering effect. Buyers in Zhangjiang came from local and international institutional investors, including end-users and insurance firms.

Overall, Shanghai remains at the forefront of China’s commercial real estate investment market, accounting for roughly half of the country’s total transaction volume. Shanghai will continue to be favored by the investment market, due to its excellent business environment, strong market demand, and investors’ preference for stable yields. Looking ahead to 2022, investment institutions will become more segmented and the ability to maximize asset value will be key to future acquisitions.


Shanghai hotels’ RevPAR in 2021 improved by 42% compared to 2020, benefiting from a spurt in local leisure demand. The average occupancy rate for the high-end hotels in 2021 is 57%, still around 70% of the pre-epidemic (2019) level. Provincial travel restrictions are expected to be in place for at least the first quarter of 2022 due to fears over the transmission of new virus variants and precautionary measures for the upcoming Winter Olympics in February. This may impact leisure and business travel demand to Shanghai. Nonetheless, hotels, particularly suburban resorts, are expected to receive a boost from strong family staycation demand.

New hotel pipeline begins to pick up, with 3,718 guest rooms added in 2021. Notable new openings include Shanghai J Hotel (165 rooms) and Shangri-La Qiantan (564 rooms) as well as suburban resorts including Hilton Shanghai Songjiang Guangfulin (244 rooms) and JW Marriott Hotel Shanghai Fengxian (265 rooms). The gradual expiration of management contracts for some of the hotels that opened around the time of the 2010 Shanghai World Expo has spawned a notable rebranding trend in the industry. For example, the iconic Le Royal Meridien Shanghai on East Nanjing Rd has recently been converted to Hilton’s luxury brand Conrad. Due to the delayed opening of some projects in 2021, there will be a spike in new supply in 2022, with 5,756 rooms entering the market.

Shanghai’s hotel and serviced apartments transaction volume reached RMB 4.0 billion in 2021, accounting for nearly 30% of the total hotel transactions in China. Motivated to diversify their asset allocation and restricted by outbound capital controls, domestic investors dominated the market with the acquisition of Somerset Shanghai Xuhui, Fraser Place Shanghai Xintiandi, and Greenland Jiulong Hotel. China’s “Three Red Lines” policy implemented in 2020 continue to exert pressure on property developers to divest their non-core assets, which comprise large portfolios of hotel assets. With a growing inventory of hotel assets available in the market and pressure for developers to offload their assets, the gap in pricing expectations is expected to narrow, and market liquidity is likely to improve in the next 12 to 24 months.

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 $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 95,000 as of September 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit