Summary of Key Points
In the first half of 2026, the number of new commercial real estate projects launched nationwide (145) reached a five-year high, representing a year-on-year increase of 21.8%. However, the market has undergone structural changes: small and medium-sized projects are now dominating the supply, the renovation of existing properties has become mainstream, resources are concentrating in higher-tier cities, leading enterprises are shifting from focusing on scale expansion to competing on quality, and there is a trend towards more differentiated business formats. Overall, the era of rapid growth in commercial real estate has come to an end, with the focus now on revitalizing existing assets and managing them more efficiently.
1. Supply Has Recovered, but Quality Has Changed: Small and Medium-Sized Projects Take the Lead in Higher-Tier Cities
The supply data for the first half of 2026 may seem to indicate a recovery, but there are significant differences from previous years:
- Increase in Quantity, but Fewer Large Projects: Of the 145 projects, 86% were small to medium-sized (with capacities ranging from 20,000 to 100,000 square meters), with 43% each in those two categories; only 3% were super-large projects with capacities over 150,000 square meters (about 4 in total). Why? Small and medium-sized projects require less investment, can be built more quickly, and are more flexible in attracting tenants (for example, community-based malls located near residential areas, which do not struggle for foot traffic). Although large projects are fewer in number, they often become significant landmarks for the city (such as Wuhan Wushang MALL·Zhongyuan with 270,000 square meters or Shanghai PRISMA New Jia Center with 220,000 square meters, which can accommodate various amenities like cinemas and ice rinks).
- Resource Allocation to Higher-Tier Cities: The East China region accounted for half of the new projects (77 in total), with over 50 launched in the Yangtze River Delta urban cluster (12 in Shanghai and 9 in Suzhou), and similar numbers in Guangzhou and Shenzhen. Developers prefer to invest in core cities with strong consumer bases (such as Shanghai and Hangzhou, which have a large brand presence and stable customer flows).
2. Renovation of Existing Properties Becomes Highly Popular
In the first half of this year, 31% of new projects were based on the renovation of existing properties (up from 20% last year), indicating a shift in market preference:
- Modernizing Traditional Stores: For instance, Shanghai New Liubai YOUNG, formerly the Pacific Department Store in Xuhui, has been transformed into a trendy venue appealing to younger consumers, avoiding direct competition with high-end stores in the area. Wuhan Happy Station台 C Hall was converted from the Wangfujing Department Store and includes many experiential elements (such as escape rooms and popular restaurants). The challenge lies in adapting to the limited space of old buildings while creating engaging experiences.
- Industrial Heritage Transformation: Projects like Changzhou Anhe Jin·CU1958, which converted a former smelting plant into an artistic commercial space, and Suzhou Wujie Meiluo Xiaoshē Center, which transformed 22 old warehouses into a cultural tourism attraction rated as a 3A-level tourist site, require significant investment and longer completion times. However, their uniqueness makes them attractive to younger visitors who value distinctive experiences.
- Public Facilities and Transportation Hubs Converted into Commercial Spaces: Changzhou Qingfenghui was converted from a subway customer service center, and Tianjin Guangyucheng from an underground passage. Although these projects are smaller in scale, they fill important commercial gaps in their communities (allowing residents to shop and dine conveniently).
The reason for the surge in property renovations is that land prices in core cities are rising, making such conversions more cost-effective. Additionally, REITs (Real Estate Investment Trusts) provide a financial mechanism that allows developers to quickly sell renovated properties and recoup their investment.
3. Leading Enterprises No Longer Compete on Quantity: Each Has Its Own Survival Strategy
The pace of new openings by leading enterprises has diverged this year; they no longer focus on opening as many projects as possible:
- Conservation-Oriented: Wanda did not open any new projects in the first half of the year (for the first time in 16 years), and Xincheng Holdings also launched only a few projects, indicating a shift towards more cautious expansion.
- Targeted Approaches: Bailian Group opened 5 projects (including outlets and shopping centers), continuing to focus on local markets despite its state-owned background. Wanqianhui and Sunac also maintained a stable pace, prioritizing the success of each new project over quantity.
- Cross-Business Conversions: Players like JD MALL have entered the market by opening stores in Shanghai and Wuhan, offering a combination of offline experiences and online shopping (for example, allowing customers to purchase products directly after trying them out in-store). These non-traditional players have intensified competition in the industry.
In summary, the focus is no longer on scale but on the ability to manage projects effectively.
4. Diverse Business Formats: Differentiation Is Key to Attracting Customers
There are too many standardized shopping centers, so new projects need to stand out with unique approaches:
- Curated Commerce: TX Changsha combines art exhibitions with shopping, allowing customers to purchase items after visiting the exhibits. Shenzhen Chao Gan Park creates immersive experiences using lighting and sound effects to attract young visitors.
- Cultural Tourism Integration: Historical districts in Ningbo and Nanjing have been preserved, incorporating restaurants and cultural venues, attracting large crowds (e.g., 600,000 visitors in the first three days of opening).
- Digital Entertainment: Xi'an NE99 is the first independent digital entertainment complex in China, featuring esports venues, VR experiences, and digital art exhibitions, targeting young enthusiasts.
The challenge with these differentiated projects is that their uniqueness makes them difficult to replicate, and they require complex management (constant content updates), but once successful, they can attract repeat customers.
Conclusion: Commercial Real Estate Enters an Era of Precision and Focus
The impressive figures for the first half of 2026 reflect a major transformation in the industry. The era of rapid growth is over, and the focus now shifts to how to renovate existing properties, manage projects effectively, and attract customers to return repeatedly. For developers, short-term success on opening day is not enough; what truly matters is creating experiences that keep customers coming for years.