ROBUST demand for retail spaces in downtown areas, coupled with rather limited supply, is expected to push up average rents in Shanghai by another 10 to 12 percent next year, a leading real estate company predicted yesterday.

Vacancy rates, another important barometer, will likely hover between five to six percent, with four percent for traditional areas and eight percent for emerging commercial hubs, Colliers International estimated yesterday in a quarterly market analysis.

"The increase of rental levels downtown will maintain its upward trajectory by virtue of the scarcity of new supply, while on the other hand, there is ample space for rental growth in emerging areas in line with its gradually maturing commercial atmosphere," said Lee Hing Yin, director for research and consultancy at Colliers.

"International brands, especially for those in apparel, food and beverage and luxury products, will nevertheless look for suitable locations to speed up their pace to expand operations."

One example is H&M, the international fashion store which opened three branches in Shanghai this year, which took a combined area of 6,400 square meters, indicating robust demand for growth.

Colliers figures have shown that a total of 656,000 square meters' retail space will be introduced to the local market in 2008, among which one-third will be in traditional areas and the rest in comparatively remote emerging areas.

Traditional shopping areas usually refer to Nanjing Road, Huaihai Road, Yuyuan Garden, Zhongshan Park, Lujiazui and Hongqiao while others, such as Daning in Zhabei District and Wujiaochang in Yangpu District, are regarded as new commercial hubs.

By the end of September, the average rent of shopping centers in Shanghai reached US$128 per square meter per month for ground-floor space, a significant rise of 14.8 percent from same time a year ago, while the average second-floor rent surged 15.5 percent from a year earlier to US$83.10 per square meter per month.

Citywide, Luwan District continued to top the list with its average ground-floor rental hitting US$153 per square meter per month, followed by Jing'an, Huangpu and Xuhui districts.