Shanghai will see a boom in new shopping mall openings this year, indicating strong market recovery and confidence in consumption, a recent report and experts said.
In a report issued by the Shanghai Council of Shopping Centers on Tuesday, as many as 45 shopping malls, with an accumulated space of over 3 million square meters, will be opened in Shanghai throughout 2023 — the largest number of new openings in the past three years.
Such addition of shopping malls — each sized above 30,000 square meters — will spur the total number in the metropolis to exceed 400 and intensify competition within the retail sector.
Operators should constantly upgrade and innovate their products and services following the latest consumption trends and consumer demand, the report said.
Huang Zhen, head of retail for real estate service provider JLL East China, said that as daily life and business are returning to normal, leasing is likely to pick up this year.
However, Huang added, occupancy rates and rents in non-core business districts will continue to be impacted this year as there is pent-up supply delayed from 2022.
James Macdonald, head and senior director of Savills China research, said people's willingness to consume and the number of tourists are expected to gradually recover, and traditional business areas, including Nanjing East Road, are expected to benefit from the recovery of the tourism sector.
The report said new openings of shopping malls covering 30,000 sq m in Shanghai numbered only 20 last year, with most of them in the last quarter.
Hit hard by COVID-19 impacts, shopping centers in the city suffered a 25.4 percent revenue loss year-onyear in 2022, and the situation in some traditional shopping malls is even bleaker, the report said.
The total business scale of shopping centers in Shanghai stayed at about 200 billion yuan ($29 billion) in 2022, contributing 12.6 percent of the city's overall retail sales of consumer goods for the year, edging down by 0.36 percentage point from the previous year, the report said.
"The sector is likely to see a leasing recovery this year as the impact from the COVID-19 pandemic is weaker, but there is stronger support due to growing demand from tenants in luxury goods and skin care, new energy vehicles and outdoor and sports equipment," Huang said.
The gradual release of pent-up consumption is expected to drive a demand rebound for prime retail properties nationwide, and major Chinese cities are projected to welcome more than 8 million sq m of high-quality new retail supply in 2023. Average rent in shopping malls will stabilize and further pick up through next year, said Xie Chen, head of research with real estate services provider CBRE China.
An action plan focusing on stabilizing expectations, shoring up confidence and pushing forward high-quality development was released by the municipal government of Shanghai in late January. Consumers will receive a 10,000-yuan subsidy for electric vehicle purchases by the end of June, and buyers of green and smart home appliances will get a 10 percent discount, the plan said.