ASIA PACIFIC OUTLOOK 2025

SHANGHAI

KEY MESSAGES

Supply

Demand

Rents

Key Outlook

Tenants will continue to focus on costs.

Approximately 0.9 million sq m of new supply is slated to enter the market in 2024, accounting for 59% of the supply peak seen in 2023 and 115% of the new supply seen in 2022. From 2025 to 2028, the Shanghai market is expected to see 3.7 million sq m of office space launched. During this period, some landlords may adjust their project launches according to market conditions, especially in the case of developers launching projects in phases.

The market will remain tenant - favourable in the foreseeable future. The large supply volume, coupled with the real economy struggling to pick up, means demand is expected to be insufficient to fill existing vacancy. The professional services, TMT, and retail & trade sectors will lead leasing market demand within the year, and domestic enterprises will continue to occupy the lion’s share of demand generation.

The leasing capacity of enterprises has declined over recent months, and in turn, landlords have further adjusted their leasing strategies. Ahead, rents are expected to drop by 7.4% to RMB222 per sq m per month by the end of 2024 and to further decline to RMB219 in 2025. Downward pressures on overall rental levels will remain in both suburban and core markets. However, into the short-term future, the rate of decline is expected to slow.

The easing policies introduced in succession since September this year will benefit the market, but tenant sentiment still needs time to change. With market conditions being more tenant-favourable, a proactive line of thinking related to an improvement in office building assets, such as fine tuning both hard and soft asset management services, has become vital to ensure office building market relevance.

Overall availability is forecasted to rise to 23.4% by the end of 2024 and to peak at around 27.6% by 2025.

Shanghai’s citywide office stock is expected to exceed the 20 million sq m mark in 2027.

Cushman & Wakefield

ASIA PACIFIC OUTLOOK 2025