News release

Shanghai property market poised to rebound 2023

According to JLL Shanghai 2022 Fourth Quarter Property Review

January 10, 2023

Vickie Zheng

+86 6393 3333

Shanghai, Jan 10, 2023 – Shanghai’s commercial property market continued to feel the effects of the pandemic in 4Q22. “As the ‘exit wave’ of COVID passes, we expect daily life and business to normalize, setting the stage for a recovery in confidence and market performance later in the year,” said Anny Zhang, Managing Director for JLL East China and Head of Office Leasing Advisory for JLL China.

Businesses overall were cautious in leasing office space in 4Q22, though there still was activity from traditional sectors like finance and professional services as well as emerging ones like life sciences and new energy vehicles. The retail market was impacted as consumers wary of the pandemic avoided malls, though certain types of shops remained popular and continued to expand. Logistics leasing was relatively resilient despite pandemic effects, with rental growth slowing but remaining positive. Primary prices in the residential market edged up as caps were slightly loosened, while sales performance further diverged between different residential projects. The rental housing market saw resilient leasing demand as new projects set new standards in terms of scale, quality, and community atmosphere. In the investment market, while the office sector still accounted for majority of the total transaction volume in 2022, rental housing assets were also sought after by investors.

Grade A Office

Shanghai's office market was slow amid continued COVID-19 impacts, coming in at 94,851 sqm for 4Q22 and 523,900 sqm for 2022 as a whole. Shanghai's 2Q22 outbreak led many tenants to delay leasing decisions, and many continue to take conservative 'wait-and-see' approaches. Annual net absorption in the CBD was 16,629 sqm, while decentralized absorption reached 507,271 sqm. “A majority of demand came from domestic firms and companies in traditional sectors like finance, professional services, and TMT,” said Neo Huang, Senior Director for JLL Shanghai Office Leasing Advisory. “We also observed new energy vehicle (NEV) firms and life science companies continuing to seek new opportunities.”

In the CBD, two projects delivered 97,455 sqm in Jing'an in 4Q22. New supply led CBD vacancy to end the year at 10.2%, up 1.1 ppts q-o-q and up 2.3 ppts y-o-y. One decentralized project delivered 64,351 sqm in 4Q22.The decentralized market saw robust take-up from headquarters demand and recent completions in popular submarkets. This led decentralized market vacancy to decrease 0.5 ppts y-o-y, ending the year at 24.5%.

CBD rents declined 0.9% q-o-q as recovery from the year's COVID-19 flareups remained slow. Rents were flat in y-o-y terms as strong growth in 1Q22 was offset by rental declines later in the year. Landlords of higher vacancy projects were more negotiable on rents, while landlords of premium buildings or those with higher occupancy stayed resilient. Decentralized rents declined 1.3% q-o-q and 1.6% y-o-y as slow leasing and lease terminations by SMEs impacted landlords' rental expectations. That said, active submarkets like Qiantan and Xuhui Bund stood out as resilient.

Looking forward to 2023, the Shanghai office market will likely recover, and the recovery momentum is expected to be significantly strengthened after the second quarter. The looser fiscal and monetary policy environment combined with other policies, including the 16-point policy package, will aid the business growth of the financial industry, and the demand for grade A offices from the traditional sectors will further be released. The continuous implementation of financial opening policies, such as the approval of wholly foreign-owned public offerings and the follow-up issuance of WOFE licenses, has presented more opportunities for foreign-funded financial companies. Supportive policies such as continuous high-level opening up to the world and attracting foreign direct investment will also help promote economic growth and stimulate domestic and foreign firms' demand for office space. Emerging industries, such as the new energy vehicle and its whole industry chain and life sciences, will continue to increase their proportions in grade A office buildings in 2023.

Business Parks

Overall net absorption reached 48,000 sqm in the fourth quarter and totalled 269,000 sqm for 2022 as a whole. Most tenants remained cautious amid lingering pandemic effects and deferred leasing decisions. That said, emerging industries such as new energy vehicles (NEVs) remained active and led leasing momentum. For example, Bosch Cross-Domain Computing Solutions (Shanghai) R&D Center leased 11,000 sqm in Jinqiao Zhi Li Fang. In terms of new supply, five projects reached completion in the quarter and delivered a total GFA of 291,000 sqm. The large supply led the overall vacancy to rise to 12.6%. Landlords adjusted expectations in line with tenants’ cautious leasing. Overall rents decreased slightly by 0.2% this quarter, remaining nearly flat at RMB 4.6 per sqm per day. For the year as a whole, rents were up 0.8%.


Continued pandemic concerns weighed further on consumer sentiment, impacting Shanghai's retail market. F&B, fashion, children's education, and cinemas all faced pandemic impacts over 2022. A few sectors remained resilient, contributing some new take-up demand. “New leases in 4Q22 mainly came from tenants in sectors like luxury, skincare and perfume, sports apparel and equipment, new energy vehicle (NEV) showrooms, pet services, and more,” said Paige Chuang, Head of Retail Agency for JLL Shanghai. “Competitively priced fast food shops and bakeries also were embraced by consumers."

Two prime malls - Zhangyuan and MOHO - delivered a combined 100,000 sqm in 4Q22. Zhangyuan opened its west section after four years of renovation, allowing its historic buildings to house a range of well-known international brands. Prime area vacancy increased 0.6 ppts to 14.3% in 4Q. Over 2022 as a whole, four prime malls delivered 159,000 sqm.

The Aspire project added 30,000 sqm in the decentralized market in 4Q22. Continued pandemic impacts on demand led decentralized vacancy to rise 0.9 ppts to 13.2% in the fourth quarter. For the full year 2022, three decentralized malls added 153,000 sqm.

The decline in prime ground floor rents narrowed to 1.3% q-o-q in 4Q22, with full year rents down 6.8% y-o-y. Decentralized ground floor rents fell 1.5% q-o-q and were down 8.0% y-o-y amid pressure from rising vacancy.

The recent lifting of pandemic restrictions and subsequent surge in cases mean we expect to see further pandemic impacts in the coming months. Brands will adopt a wait-and-see-attitude until daily life and business return to normal, likely in 2Q or 3Q23. Leasing momentum thus is likely to pick up in 2023. Decentralized area occupancy and rents will continue to be impacted in 2023 as large supply delayed from 2022 reaches completion. The prime area is likely to lead a leasing recovery in 2023 as pandemic effects fade, supported by luxury and skin care brands, emerging NEV brands, and outdoor and sports tenants.


Leasing activity held steady over 4Q22 with 101,800 sqm of net absorption, bringing the full year total to 336,700 sqm. “While net take-up for 2022 was down from 2021's record high, it still reflected the market's resilience even as 2022's COVID-19 flareups disrupted economic activity,” said Richard Huang, Co-Head of Logistics & Industrial for JLL China. Leasing this quarter was mainly driven by expansion activities from 3PL companies. For example, one local 3PL leased more than 6,000 sqm in Songjiang submarket while multiple local 3PLs leased a combined total of more than 10,000 sqm in Fengxian. As a result, the market's vacancy decreased from 9.8% to 9.6%.

New Ease delivered its DNE Jinshan New Material Logistics Park (62,800 sqm), the fourth quarter's only new completion. Five projects were completed over the full year 2022, for a total of 332,500 sqm. Compared to 2021 when most new projects were concentrated in Jinshan submarket, in 2022 new supply was spread across multiple submarkets including Songjiang, Qingpu, Fengxian, and Jinshan.

Resilient demand helped rental growth stay positive in 4Q22, especially in submarkets with low vacancy. Rents grew 0.86% q-o-q on a like-for-like basis to RMB 1.57 per sqm per day. That said, the large volume of new supply since 2021 has contributed to a slowdown in overall rental growth, with rents up 2.9% for 2022 as a whole versus 3.7% in 2021.

Over 2023, six projects (658,000 sqm) are expected to be delivered across various submarkets including Qingpu, Songjiang, and Jinshan. However, we expect leasing activities will gradually recover as Shanghai moves past the peak of the pandemic.


Lingering pandemic effects and a still-tight local housing policy led buying momentum to moderate towards the year end. As a result, mass market primary sales volumes declined 27.5% q-o-q to 2.7 million sqm in 4Q22. The year concluded with annual sales of 10.3 million sqm, down 4.0% y-o-y. Sales performance diverged between projects. Good-value projects in prime locations were still in high demand, while other projects saw slower sales. In 4Q22, high-end sales increased 43.4% q-o-q to 1,050 units. For the full year of 2022, high-end sales totalled 4,090 units, up 26.0% y-o-y.

Although China's 20th CPC National Congress delayed new launches in October, a supply surge later in the quarter led mass market new supply to increase 15.1% q-o-q to 4.1 million sqm in 4Q22. For 2022 as a whole, new supply reached 11.5 million sqm, up 41.6% y-o-y. Five high-end projects launched 1,067 units in 4Q22 (up 35.9% q-o-q), with average prices ranging from RMB 125,000 to RMB 145,000 per sqm. Riverside Palace - developed by Forte in Xuhui West Bund - was popular with homebuyers, with its prime location helping it to nearly sell out on launch day.

With caps on primary prices slightly loosened in 4Q22, primary prices edged up 1.4% q-o-q to RMB 129,700 per sqm. Meanwhile, secondary market homebuyers were discouraged by previous price hikes, while abundant high-end primary supply also diluted demand. As a result, high-end secondary prices declined 1.6% q-o-q to RMB 107,000 per sqm. Leasing activity slowed in the fourth quarter due to seasonality as well as a reduction in tenant numbers brought on by the lingering effects of the pandemic. As such, average rents fell by 1.1% q-o-q to RMB 173.2 per sqm per month in 4Q22.

“Given the recent lifting of 'zero-Covid' measures, we expect market activity to be impacted over the next few months. However, with people's lives returning to normal after Shanghai passes its peak of Covid infections and given looser monetary policy nationwide, overall home sales momentum is likely to see a gradual recovery in 2Q and 3Q of 2023.” said Sherril Sheng, Research Director for JLL China Residential Sector. With price caps likely to stay loose, primary prices are expected to see mild growth in the short term. On the other hand, secondary prices are likely to experience further declines in 1H23, and then stabilize in 2H23 as Shanghai returns to normal and market confidence recovers.

Rental Housing

China stepped up support for its rental housing market over 2022. Previous policies were maintained over the year, including increasing land supply, lower taxes, and supporting corporate bond financing for the construction of guaranteed rental housing. Shanghai also introduced new supportive policies, including relaxing conditions and maximum housing provident fund withdrawal limits for rent payments, as well as simplifying the application processes. “These favourable policies are expected to further drive up demand for rental housing in 2023. While rental housing will become more attractive to young white-collar workers – the traditional tenant group for this emerging residential property type – rental housing also will attract more families and middle-to-upper class tenants, among many other tenant types,” said Sherril Sheng, Research Director for JLL China Residential Sector.

In 2022, the total stock of Shanghai's rental housing market reached 108,000 units, while the average occupancy rate ended the year at 86.3%. Total stock is expected to reach 189,000 units by the end of 2023. The market has benefitted from the launch of higher-quality rental housing projects and continued improvement of amenities such as fitness centres, study rooms, and community centres. With large-scale, high-quality projects featuring strong community atmosphere reaching the market, Shanghai’s rental housing market saw resilient leasing demand over 2022.

Four rental housing REITs were successfully launched in 2022. These provided valuable experience for China’s rental housing market to complete a closed loop of "investment, financing, management, and exit," while also helping to drive up the emerging rental sector’s investment activity. The year 2022 saw 15 en-bloc transactions involving rental apartments in Shanghai, a significant increase compared to previous years. With the sector’s gradual maturation and the diversification of transaction types and buyers, the rental housing investment market is expected to become more active in 2023.

Capital Markets

Shanghai saw 74 transactions with a total volume of RMB 83.64 billion in 2022, down 22.8% from 2021’s RMB 108.3 billion. Covid restrictions and a more uncertain global economy disrupted transactions in 2Q and 3Q. Policies to support the real estate sector came into effect in 4Q and helped produce a significant uplift in transactions. Total transaction volume for the fourth quarter reached 26.4 billion RMB, representing 31.6% of 2022’s total and rising 36.8% y-o-y compared with the same period in 2021.

The office sector remained investors’ asset class of choice, accounting for 64.3% of total transaction volume in 2022. Investors also sought rental housing assets in 2022, with 15 transactions over the year making it the second most popular asset class. We also observed investor interest in business parks, hotels, senior living facilities and other alternative asset classes.

Institutional investors accounted for 40% of all transaction volumes, focusing on logistics assets, business parks, and rental housing. Self-use investors were active acquiring newly-built office assets in strategic locations with prime views.

The retail sector remained under pressure as the pandemic and policy action impacted rents and occupancy levels. With lockdowns ending as the pandemic passes, we expect to see an improvement in the retail sector in 2023.

According to Head of Capital Markets for JLL East China Ling Sun, “The investment market is being bolstered by a range of policies such as the recent resumption of financing for listed real estate companies, as well as private equity being allowed to establish private real estate investment funds. The market also is benefiting from the accelerated broadening of the scope for REITs and broader official measures to revive China’s property sector. With Covid restrictions ending and asset prices declining to more reasonable levels over the last few years, a pick-up in investor sentiment and a rebound in Shanghai’s investment market may take place in 2023.”

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 102,000 as of September 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit