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Savills Research

Residential Sales Beijing – April 2019

Residential transaction levels rebound The residential market recorded a significant increase in new supply and transaction volumes, a sign of resurgence.

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“ Despite the traditional slow season falling at the beginning of the year, the residential market was largely active in Q1/2019. A recent policy easing to counter a credit squeeze unleashed purchasing demand and fuelled a rebound in the market.” VINCENT LI, SAVILLS RESEARCH & CONSULTANCY

• Following the Chinese New Year period, performance in Beijing’s residential mass-market rebounded significantly. There was a pickup in activity by both developers and buyers in the first quarter of 2019.

• The first-hand, mass-market residential market received adequate supply in Q1/2019. New supply volumes of residential projects reached 1.04 million sq m, down 63% quarter-on-quarter (QoQ), though up 100.1% year-on-year (YoY).

• The city-wide residential transaction volume reached 0.94 million sq m, down 15.5% QoQ though up 133.1% YoY.

• As Q1 is traditionally a slow season, with Chinese New Year falling during the quarter, supply of high-end residential projects was limited. Only one project made its debut in Q1/2019, contributing 112 units of new supply.

• Three high-end villa projects obtained their pre-sale permits, adding 327 units of supply to the market.

• High-end apartment average prices increased by 0.4% QoQ and 5.5% YoY to RMB96,261 per sq m in Q1/2019.

• High-end villa average prices rose by 0.8% QoQ and 9.0% YoY to RMB71,831 per sq m during Q1/2019.

• A total of 29 land plots were transacted in Q1/2019, registering a combined transaction volume of RMB58.94 billion and a 23.2% QoQ decrease. A total of 22 plots were designated for residential usage.

Anthony McQuadeManaging DirectorNorth China+8610 5925 2002anthony.mcquade@savills.com.cn

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Savills team

James MacdonaldSenior DirectorChina+8621 6391 6688james.macdonald@savills.com.cn

Vincent LiAssociate DirectorNorth China+8610 5925 2044vincentx.li@savills.com.cn

RESEARCH

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FIRST-HAND, MASS-MARKETDespite the traditional slow season at the beginning of the year, the first-hand, mass-market residential market received adequate supply in Q1/2019. This was due in large part to the loosening of regulations in Q1/2019 for obtaining pre-sale permit approval for residential projects. New supply volumes of residential projects reached 1.04 million sq m, down 63% QoQ, though up 100.1% YoY.

Purchasing demand was unleased in the resurging market, with transaction volumes up a significant 133.1% YoY to 0.94 million sq m in Q1/2019, though down 15.5% QoQ.

FIRST-HAND, HIGH-END APARTMENT MARKETHigh-end apartment supply declined in Q1/2019, with only one project making its debut and contributing 112 units to the sales market. High-end apartment transaction volumes were largely stable, totalling 411 units during Q1/2019, marking a 44.6% QoQ decline, though up 165% YoY.

The average price of high-end apartments continued to rise by 0.4% QoQ and 5.5% YoY to RMB96,261 per sq m by the end of the Q1/2019.

FIRST-HAND, HIGH-END VILLA MARKETSupply levels were comparatively more stable in the high-end villa market compared to those in the high-end apartment market in Q1/2019. A total of three high-end villa projects were granted pre-sale permits during Q1/2019, adding 327 units to the market. High-end villa transaction volumes

reached 179 units during the quarter, down 63.3% QoQ, though up 145% YoY.

High-end villa average prices increased 0.8% QoQ and 9.0% YoY to RMB71,831 per sq m by the end of Q1/2019.

LAND MARKETLand supply in the Beijing market increased significantly during Q1/2019, particularly for plots positioned for residential usage. A total of 29 land plots were transacted during the quarter, registering a combined consideration of RMB58.94 billion, down 23.2% QoQ, though up 2.9% YoY. Of the 29 plots, 22 were designated wholly or partially for residential usage.

MARKET OUTLOOKFollowing a year of strict regulatory control, it is expected that the same supervisory tone will carry over into 2019, and thus the government will continue to prioritise the stable and healthy development of the residential sector. Meanwhile, in hopes of ensuring the accuracy of its regulatory policies, the central government could potentially delegate the right of formulating policies to the local government level where they would be able to adjust policies to best f it local market dynamics.

The real estate finance market will likely become a focus of policy work in 2019 while purchasing demand and healthy market f low will be supported through appropriate loan policies.

Source National Bureau of Statistics of China, Beijing Municipal Commission of Housing and Urban-Rural Development, Savills Research

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Source Savills Research Source Beijing Municipal Commission of Housing and Urban-Rural Development, Savills Research

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GRAPH 1: First-Hand Mass-Market Residential Supply, Absorption And Price Index, Q2/2014 to Q1/2019

GRAPH 2: First-Hand, High-End Apartment Market Supply, Absorption And Price, Q2/2014 to Q1/2019

GRAPH 3: First-Hand, High-End Villa Market Supply, Absorption And Price, Q2/2014 to Q1/2019

PROJECT NAME CATHAY MANSION

District Fengtai

Developer Tahoe Group

Supply Units 112

Pre-sale Price(RMB per sq m) 81,000-82,000

Residential Sales

TABLE 1: New High-End Apartments Launched In Q1/2019

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Source Beijing Municipal Commission of Housing and Urban-Rural Development, Savills Research

Source Beijing Municipal Bureau of Land and Resources, Savills Research

TABLE 2: New High-End Villas Launched In Q1/2019

PLOT # DISTRICT BUYER GFA(SQ M)

CONSIDERATION(RMB BILLION)

ACCOMMODATION VALUES

(RMB PER SQ M)

Tongzhou2018 – 062 Tongzhou Vanke / Ping’an 280,243 6.66 23,765

Haidian2018 – 058 Haidian Jingtou Estate 320,600 6.3 20,820

Shijingshan2018 – 061 Shijingshan Beijing Capital Land /

Seazen 116,359 4.95 42,567

Daxing2019 – 001 Daxing China Overseas

Property 177,023 4.44 25,081

Fengtai2018 – 069 Fengtai Vanke / China

Development Orient 184,119 4.3 23,354

PROJECT NAME DISTRICT DEVELOPER SUPPLY UNITS PRE-SALE PRICE(RMB PER SQ M)

Cathay Mansion Fengtai Tahoe Group 78 84,000-85,000

Rong Mansion Fengtai Financial Street Holdings 41 66,000-68,000

Xanadu & Ocean Epoch Chaoyang Beijing Capital Land / Sino-Ocean 208 63,000-72,000

Residential Sales

TABLE 3: Key Residential Land Plot Transactions, Q1/2019