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savills.com.cn/research 01
Briefing Residential sales May 2018
Savills World Research Shanghai
New commodity residential supply rebounded by 135.9% quarter-on-quarter (QoQ) in Q1/2018 to 670,000 sq m, but remained down 33.9% year-on-year (YoY).
First-hand commodity residential transaction volumes increased by 1.4%, totalling 1.2 million sq m, down 20.1% YoY.
Average transaction prices fell by 9.6% QoQ to RMB44,200 per sq m, down 6.8% YoY.
The first-hand high-end apartment market has received no new supply for three consecutive quarters.
First-hand high-end apartment market recorded a decline in transaction volumes, falling 35.6% from the previous quarter to 62,000 sq m in Q1/2018, down 59.1% YoY.
First-hand high-end apartment transaction prices grew 0.2% in Q1/2018 to an average of RMB106,500 per sq m.
No pure for-sale residential land plots were transacted in Q1/2018.
First time buyer mortgage rates in Shanghai increased to 5.11% in March 2018 from 4.41% a year earlier.
“Volumes remained close to all-time lows in the first quarter with buyers continuing their wait for new products at what is expected to be a discount to market. Prices of existing stock remained stable with only a limited number of developments vying for buyers’ attention.” James Macdonald, Savills Research
SUMMARYThe market is eagerly anticipating a rush of presale permits in April as the conditions stabilise and the standoff between the government and developers begins to thaw.
Image: Fuxing Royale, Huangpu District
02
Briefing | Shanghai residential sales May 2018
Market overviewNew commodity residential supply and transaction volumes continued to hover at historically low levels, partly due to the Chinese New Year period.
New commodity apartment average transaction prices fell, while second-hand prices climbed to new heights. This convergence in average prices narrowed the price gap between first and second-hand markets to only RMB4,000 per sq m in Q1/2018, the smallest gap seen in the past six years.
Unsold inventory levels continued to fall to historically low levels, totaling 4.6 million sq m, as transaction volumes outstripped supply for the seventh consecutive quarter. Shanghai’s newly-added housing development loans increased RMB24 billion in Q1/2018, the highest jump seen in recent years, while added mortgage loans remained at low levels.
Overall commodity1 residential marketFirst-hand marketNew commodity residential supply rebounded by 136% QoQ in Q1/2018 to 670,000 sq m, but remained down 33.9% YoY.
First-hand commodity residential transaction volumes increased by 1.4%, totalling 1.2 million sq m, but down 20.1% YoY.
Average mortgage rates in Shanghai rose to 5.11% in March, according to Rong 360, an online financial services 1 Commodity housing excludes residential properties designated for relocated residents
under urban redevelopment plans, as well as economical housing.
Supply Transactions Average price
sq m QoQ (%) sq m QoQ (%) RMB psm QoQ (%)
Apartment 576,095 121.0% 1,032,690 9.6% 43,254 (12.1%)
Villa 96,757 294.0% 160,414 (31.5%) 50,074 5.7%
Overall 672,852 135.9% 1,193,104 1.4% 44,171 (9.6%)
TABLE 1
First-hand commodity residential market by property type, Q1/2018
Source: Shanghai Real Estate Trading Center; Savills Research
GRAPH 1
Shanghai newly added individuals mortgage loans, Q1/2014–Q1/2018
0
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120
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
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llion
Source: Shanghai Real Estate Trading Center; Savills Research
GRAPH 2
First-hand commodity residential market supply, transaction volume and prices, Q1/2008–Q1/2018
0
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30,000
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50,000
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 18
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Supply (LHS) Transaction volume (LHS) Average transaction price (RHS)
Source: Shanghai Real Estate Trading Center; Savills Research
savills.com.cn/research 03
Briefing | Shanghai residential sales May 2018
GRAPH 3Ring road regions transaction volume and prices, Q1/2016–Q1/2018
0
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40,000
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80,000
100,000
120,000
0
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Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18
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sq m
Inside Inner Ring Rd. Between Inner and Middle Ring Rd.Between Middle and Outer Ring Rd. Between Outer and Suburban Ring Rd.Outside Suburban Ring Rd.
company. However, Shanghai once again has some of the lowest rates in the country compared to the national average of 5.51%.
All of the regions delineated by Shanghai’s ring roads recorded decreases in transaction volumes QoQ, except for the region outside the suburban ring road, which thanks to increased activity, boosted the overall transaction volume for the city higher than Q4/2017. Overall, 84% of transactions were located outside the middle ring road. Volume inside the inner ring road continued to fall due to very limited supply, down 55% QoQ, while prices fell 2.5% to RMB105,600 per sq m. Meanwhile, prices between the inner and outer ring roads reached new highs.
Average transaction prices fell by 9.6% QoQ to RMB44,200 per sq m, down 6.8% YoY. This decline was largely a result of the make-up of transactions, which this quarter were heavily skewed towards the less expensive suburban regions of the city.
Second-hand market2
Similar to the first-hand market, second-hand residential transaction volumes continued to remain at low levels of just 2.8 million sq m,
2 Includes both commodity and economical housing.
up 5.8% in Q1/2018. Nevertheless, transaction prices increased 1.0% QoQ to a new high of RMB40,100 per sq m, partly due to buyers shifting their attention away from the first-hand market, which remains significantly understocked and undersupplied.
Demand for high-end product currently found in the second-hand market could shift to the first-hand market as new stock becomes available in the coming quarters.
High-end residential sales market3
No new supply has been seen in the first-hand, high-end apartment market for three consecutive quarters.
The first-hand, high-end apartment market recorded a decline in transaction volume, falling 35.6% in Q1/2018 to 62,000 sq m, down 59.1% YoY.
First-hand, high-end apartment transaction prices grew by 0.2% in Q1/2018 to an average of RMB106,500 per sq m. Average transaction prices have proven relatively unstable given the record low transaction volumes (only 246 3 Judged by comprehensive criteria including location, building quality, total volumes, unit size, transaction price and property management.
GRAPH 4Second-hand residential sales market transactions and prices, Q1/2008–Q1/2018
0
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14,000
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28,000
35,000
42,000
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 18
RM
B per sq mm
illio
n sq
m
Transaction volume (LHS) Average transaction price (RHS)
Source: Shanghai Real Estate Transaction Centre, Savills Research
units sold in Q1/2018). However, the price index in secondary residential areas continued to grow as the sector also had the majority of unsold stock and recorded 83% of transactions. Residential land marketNo pure for-sale residential land plots were transacted in Q1/2018. The first auction of a pure for-sale residential land plot in 2018 occurred on 12 April. The plot is located near Wanda Plaza Baoshan and sold at the reserve accommodation value (AV) of RMB30,194 per sq m.
Ten for-lease land plots were sold in Q1/2018. Three of those plots were bought by private enterprises. This represents the first time a private enterprise has bought for-lease residential land in Shanghai.
Source: Shanghai Real Estate Trading Center; Savills Research
GRAPH 5
First-hand, high-end apartment market* supply, Q1/2006–Q1/2018
0
100,000
200,000
300,000
400,000
500,000
600,000
Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 Q1/18
sq m
Primary area Secondary area Emerging area
Source: Shanghai Real Estate Transaction Centre, Savills Research *Primary: Well-established luxury residential enclaves within the inner ring road (Middle Huaihai Road, Lujiazui Riverside, Xinhua Road, Century Park,etc.). Secondary: Developing high-end residential enclaves within the middle ring road (Suhe Creek, Dapuqiao, Gubei, Xuhui Riverside,Yangpu Riverside,Qiantan,etc). Emerging: Emerging high-end residential enclaves outside the middle ring road (Xinjiangwan Town, Sanlin, Waigaoqiao etc.).
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Briefing | Shanghai residential sales May 2018
For-lease residential land supply totalled 522,000 sq m of buildable area with an AV of RMB5,220 per sq m, down 24.5% QoQ. All plots were sold at their reserve pricing.
Residential sales market outlookSupply of new high end stock is expected to increase in the remainder of 2018 as many developers of existing projects are liable to obtain pre-sales licences after extended talks with the government.
A number of the high-end apartments, especially those in core locations, were heavily oversubscribed. Buyers were not only attracted by the release of new stock after such a long dry spell but also by the attractive pricing offered by the developers and the general scarceness of new build developments in well-situated locations.
Shui On obtained presale permits for the latest batch of its fourth phase, two and half years after its previous batch was launched. As the only new project in Xintiandi area, the project was one of the most highly sought after developments and is quoting one of the highest sq m prices in Puxi and unit prices start from RMB30 million. Jing’an Prime Land’s second batch and Jinmao Palace Ph3 obtained presale prices similar to earlier phases while Phili Regency secured lower asking prices than an earlier phase after having waited for two and a half years.
Even Xinjiangwan Garden City, which is located outside the middle ring
Project District Area Transaction area (sq m)
Average transaction price(RMB psm)
Tomson Riviera Pudong Lujiazui Riverside 595 246,985
Above the Bund Hongkou North Bund 361 204,196
Suhe Creek Zhabei Suhe Creek 276 194,630
One Park Minhang Jinhongqiao 7,293 154,316
Chateau Pinnacle Changning Xinhua Road 261 140,923
TABLE 2
Top five apartment projects by first-hand transaction prices, Q1/2018
Source: Shanghai Real Estate Transaction Centre, Savills Research
Source: Shanghai Real Estate Trading Center; Savills Research
GRAPH 6
First-hand, high-end apartment market transaction volumes and prices, Q1/2008–Q1/2018
80
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Q4/ 2010 = 100
sq m
Primary area transaction volume (LHS) Secondary area transaction volume (LHS)Emerging area transaction volume (LHS) Primary area price index (RHS)Secondary area price index (RHS) Emerging area price index (RHS)
Source: Shanghai Municipal Bureau of Planning and Land Resources; Savills Research
GRAPH 7
Residential land transaction area (buildable area) and AV, Q1/2008–Q1/2018
0
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 18
RM
B per sq m
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Land transaction GFA (LHS) Accommodation value (RHS)
savills.com.cn/research 05
Briefing | Shanghai residential sales May 2018
Please contact us for further information
Savills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.
This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
James MacdonaldSenior DirectorChina+8621 6391 6688james.macdonald@savills.com.cn
Siu Wing ChuManaging DirectorCentral China+8621 6391 6688siuwing.chu@savills.com.cn
Shirley TangSenior DirectorShanghai+8621 6391 6688shirley.tang@savills.com.cn
Research Agency
road, was oversubscribed. Cinda originally acquired the 148,500 sq m plot of land in 2015 for RMB7.3 billion or RMB49,150 per sq m an 82% premium over the reserve price, the units were listed at between RMB82,827 and 128,941 per sq m.
Qiantan Ocean One—with its sister project Ocean One in Lujiazui—launched 437 units with average pricing at a discount of roughly RMB10,000 per sq m to surrounding
projects. This very attractive pricing attracted a number of buyers with units more than eight times oversubscribed.
Around 30 projects located inside the ring road are expected to obtain their presale permits in 2018, with the majority of these located in Pudong, Yangpu, Huangpu and Jing’an districts. The combined launches could total up to 1.5 million sq m and close to 6,000 units. The remainder
Michelle ZhouDirectorChina+8621 6391 6688michelle.zhou@savills.com.cn
of the city could see an additional 120 developments launched, bringing the total to 150 projects, compared to 143 projects last year.
While the market is likely to be much more active this year given the new supply expected during the remainder of the year, a further tightening of credit availability and increasing cost of debt could put off certain buyers, which could suppress transaction volumes.
Central Management
Source: Shanghai Real Estate Trading Center; Savills Research * At the time of writing, the projects had received presale permits. All projects have prices over RMB70,000 per sq m.
TABLE 3
Projects* opened in April 2018
Project (EN) Project (CN) District GFA(sq m) Number of units Date
List price lowest / highest
(RMB per sq m)
Jing’an Prime Land 静安华邸 Zhabei 33,278 319 Apr 03 79,522/93,056
Lakeville Luxe 翠湖天地隽荟都 Luwan 42,323 118 Apr 10 125,000/196,800
Xinjiangwan Shanghai Garden 信达泰禾上海院子 Yangpu 32,585 376 Apr 17 82,827/128,941
Baohua City Star 宝华城市星苑 Putuo 63,043 492 Apr 19 88,862/105,189
Phili Regency 翡丽雅苑 Yangpu 30,061 130 Apr 20 84,700/114,200
Jinmao Palace 金茂雅苑 Zhabei 62,239 382 Apr 21 85,516/101,713
Qiantan Ocean One 前滩海景壹号 Pudong 41,963 437 Apr 23 72,809/97,279
Dynasty on the Bund 新世界花园 Luwan 57,959 225 Apr 26 93,718/145,000
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