Savills World Research Beijing

Briefing Residential sales July 2014

Image: North River No.77, Dongcheng district SUMMARY The price gap between the overall market and high-end sector widened further, as both high-end apartment and villa prices continued to witness steady growth.

 Beijing’s first-hand residential  Grade A apartment transaction market are expected to grow in market was cool in the second quarter. volumes reached 339 units in the the coming six months, given that Supply surged by 107% quarter-on- second quarter, only half of the several prime residential projects are quarter (QoQ) to 3.3 million sq m, while quarterly average (654 units) in 2013. scheduled to enter the market with transaction volumes fell 15% QoQ to Prices, however, continued to grow high proposed prices. 1.4 million sq m, the lowest level in the and rose 5.3% QoQ to an average of last five years. RMB66,160 per sq m, up a significant 19.6% year-on-year (YoY). “Despite a weak performance in  Fierce competition between projects restricted overall price growth  High-end villa transaction volumes the overall market, several prime to just 1.3% in the first five months of rose by nearly 40% QoQ to 232 units. residential projects entered the 2014 compared with 15% in 2013. As a result, prices appreciated by 4.9% QoQ to an average of RMB49,200 per market on schedule with high  Four Grade A apartments and five sq m, up 2.2% YoY. high-end villa projects entered the pre-sale prices.” Joan Wang, Savills sales market in the second quarter,  Both transaction volumes and Research adding a total of 790 units. prices in the high-end residential

savills.com.cn/research 01 Briefing |Beijing residential sales July 2014

First-hand mass-market GRAPH 1 overview First-hand mass-market residential supply, take-up Similar to many other cities across and price index, Q1/2006–Q2/2014 , Beijing’s first-hand residential market was cool in the second Supply (LHS) Absorption (LHS) Price index (RHS) quarter in terms of transaction 7 350 volumes compared with 2013. A total of 97 residential projects 6 300 were granted pre-sales certificates, pushing supply up by 107% QoQ 5 250 to 3.3 million sq m. A number of June 2005= 100

developers are eager to launch 4 200 their projects given the large supply of self-use commodity housing in 3 150

the pipeline and in exchange for m sq million 2 100 cash flow under a tightened credit environment. 1 50

Transaction volumes, however,

0 0 fell 15% QoQ to 1.4 million sq m, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 the lowest level over the past five 06 07 08 09 10 11 12 13 14

years. This can be attributed to an Source: Beijing Real Estate Transaction and Management Bureau, Beijing Municipal Bureau of Statistics, Savills increasing wait-and-see attitude Research

GRAPH 2 among consumers given the weak second highest level since Q1/2013, First-hand Grade A apartment market performance in terms of both transaction volumes recorded a transactions volumes and price relatively low 339 units in the second supply, take-up and price, Q1/2006– growth. Additionally, two self-use quarter. This figure is lower than Q2/2014 Figure 2 EN commodity housing projects, BBMG the average of 558 in the past four Huixing Garden (金隅•汇星苑) and BJ quarters, although it has remained Supply (LHS) Absorption (LHS) Price (RHS) Capital Land Yueduhui ( ), relatively stable compared with the 3,500 Units 70,000 首创•悦都汇 have entered the market and another last quarter. This was largely a result 3,000 60,000 nine are scheduled to be launched of several property purchases by high 2,500 50,000

RMB per sq m RMB persq in the near future, offering a total of net worth individuals (HNWIs) being 2,000 40,000 nearly 18,000 units with proposed postponed or even suspended either

Units 1,500 30,000 prices ranging from approximately by current economic uncertainties RMB10,000 per sq m to RMB22,000 or a growing appetite in overseas 1,000 20,000 per sq m, much lower than their investments. 500 10,000 counterparts in the vicinity and

0 0 consequently freezing some end-user Despite suppressed transaction

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 demand in the short term. volumes, transaction prices held firm 06 07 08 09 10 11 12 13 14 Source: Savills Research in the second quarter, and grew 5.3% Page 1 Consequently, fierce competition QoQ to an average of RMB66,160 GRAPH 3 between projects constrained overall per sq m, up 19.6% YoY. This was First-hand high-end villa market price growth to just 1.3% in the first supported by a growing pool of five months of 2014, compared with HNWIs in the capital city combined supply, take-up and price, Q1/2006– 15.0% in 2013. with a decreasing number of prime Q2/2014 Figure 3 EN residential projects. Supply (LHS) Absorption (LHS) Price (RHS) First-hand Grade A 900 54,000 apartment market Following the government’s 800 48,000 Three new Grade A apartments relaxation of the approval process 700 42,000 and the new phase of one existing for pre-sales certificates for high- 600 36,000 m sq RMB per project entered the market in the end projects in early 2014, three 500 30,000 second quarter, adding a total of 577 prime projects entered the market on Units 400 24,000 units, down 62.4% QoQ. As a result, schedule.

300 18,000 total supply of Grade A apartments 200 12,000 accumulated to 2,110 units in the ­- Vanke North River No.77 (万科北 100 6,000 first half of 2014, nearly five times 河沿甲柒拾柒号), an existing project

0 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 that in 2013FY. located in Dongcheng district 06 07 08 09 10 11 12 13 14 acquired by Vanke from CapitaLand Source: Savills Research Page 1 Despite supply registering its for a unit price of approximately

02 Briefing | Beijing residential sales July 2014

RMB54,000 per sq m in 2013, TABLE 1 entered the sales market with an Beijing self-use commodity housing projects asking price between RMB100,000 and RMB150,000 per sq m; Proposed price Project Location Units (RMB per sq m) BBMG Huixing Garden ­- Poly Hyde Park (保利海德公 Chaoyang district 1,800 22,000 ) 园) was granted approval with a (金隅•汇星苑 Yueduhui pre-sale price of RMB97,000 per Chaoyang district 540 16,000 ( sq m, the highest in the first half of 首创•悦都汇) Yueruhui 2014. The plot was the land king in Pinggu district 1,600 11,000 (首创•悦洳汇) 2010 with an accommodation value Yuanxiangjiayuan (AV) of RMB30,000 per sq m and Fangshan district 1,400 10,500 (中国铁建•原香嘉苑) was acquired by Shunxinjiayuan through an equity acquisition of the Shunyi district 290 16,000 (中国铁建•顺新嘉苑) previous landlord in 2011. Apart from Jiuyuancheng Tongzhou district 1,100 10,000 apartments, Poly Hyde Park also (紫峰•九院城) includes villa and office components; Manfangting Shunyi district 1,160 19,000 (住总正华新国展满庭芳) ­- COL Fontaine Mansion (中海枫丹 Dangdai MOMA Daxing district 1,400 9,500 公馆), located in the CBD vicinity, (当代采育满庭春MOMA) Chaoyang district, and targeting Huijingyuan Chaoyang district 3,400 22,000 wealthy consumers with strong (金隅•汇景苑) upgrade demand, entered the market Yujingwan Chaoyang district 2,000 22,000 with pre-sale prices ranging from (恒大御景湾) RMB89,000 to RMB94,000 per sq m. Huilanmeiju Chaoyang district 3,300 16,000 (富力惠兰美居) First-hand high-end villa Source: Savills Research market One new high-end villa, Poly Hyde TABLE 2 Park (保利海德公园), entered the New high-end apartments, Q2/2014 market offering 24 units. Additionally, four existing projects, namely Royal Pre-sales price Project Location Units Spring Villa (金科王府), Wonderland (RMB per sq m) Mansion ( ), Chinoiserie 燕西华府 Vanke North River No.77 Dongcheng district 25 100,000–150,000 Villa (九章别墅) and Linyu villa (万科北河沿甲柒拾柒号) (鸿坤林语墅), launched their new Poly Hyde Park Haidian district 139 97,000 phases adding a total of 189 units (保利海德公园) to the market. Consequently, supply Foutain Mansion Chaoyang district 313 89,000–94,000 totalled 213 units in the second (中海枫丹公馆) quarter, down 56.9% QoQ. Zhen Garden Chaoyang district 100 47,000–50,000 (臻园)

Given the positive performance of Source: Savills Research several prime projects launched in recent quarters, however, transaction by the end of the second quarter, RMB17.5 billion, accounting for 48% volumes rose 39.8% QoQ to 232 representing a YoY growth of 2.2%. of the total in the second quarter. No units, up 33.3% YoY. residential land plots were transacted Residential land market in May or June. This was largely a In the second quarter, three prime The land market was quiet in result of the government intentionally projects launched in the past few the second quarter, with only 39 squeezing land supply in reaction quarters, namely Life Beyond land plots transacted for a total to the weak performance of the Golden Dream (龙湖•双珑原著), consideration of RMB36.2 billion, residential market combined with the Thaihot Beijing Yards (泰禾•北京 down 51.9% QoQ. Eighty-four declining enthusiasm of developers 院子) and Linyu Villa (鸿坤林语墅), percent of land plots were transacted for land acquisition. outperformed in the market in terms in April in terms of transaction of transaction volumes, with their volume, while only five were This decline in enthusiasm was units accounting for more than half transacted in May and June. evidenced by suppressed residential of the total, and prices reaching transactions over the past six RMB35,000 to RMB60,000 per sq m. With 18 residential plots transacted months. In the second quarter, the in the first quarter of 2014, only most expensive residential plot was As a result, high-end villa transaction eight residential plots (or mainly for transacted under an adjusted AV of prices appreciated by 4.9% QoQ to residential projects) were transacted RMB26,100 per sq m, compared an average of RMB49,200 per sq m in April, for a total consideration of with seven residential plots which

03 Briefing | Beijing residential sales

were transacted under an adjusted TABLE 3 AV of between RMB26,400 and New high-end villas, Q2/2014 RMB73,100 per sq m in 2013.

Pre-sales price Project Location Units Market outlook (RMB per sq m) Given that overall residential price Poly Hyde Park growth is expected to be further Chaoyang district 24 97,000 (保利海德公园) constrained due to the large amount Royal Spring Villa of self-use commodity housing Changping district 36 43,000–52,000 (金科王府) projects scheduled to enter the Wonderland Mansion Fengtai district 85 30,000–40,000 market, the government is expected (燕西华府) to continue loosening approvals for Chinoiserie Villa Chaoyang district 18 51,200–91,000 pre-sales certificates for high-end (九章别墅) projects in the coming six months, Linyu Villa Daxing district 50 35,000–45,000 allowing more high-end projects to (鸿坤林语墅) enter the market on schedule as a Source: Savills Research result.

Consequently, six Grade A TABLE 4 apartments, including Kun Yu Palace Major residential land transactions, Q2/2014 (琨御府) and Wanliu Academy (中赫 Adjusted AV 万柳书院) located in Haidian district, Site area GFA Plot District Purchaser (RMB per (sq m) (sq m) Wangfujing Mansion (王府井公馆) in sq m) Dongcheng district, and Central Park Plaza（中央公园广场）, Sanlitun Daxing Huangcunzhen plot Daxing Zhenghao Ltd 59,600 174,800 26,100 No.1 ) and Kaisa Plaza (三里屯壹号 Beijing Fengtai district Beijing (佳兆业广场) in Chaoyang district, are Changxindianzhenxinzhuang Fengtai Zhongchangheyuan 126,100 184,800 21,000 expected to enter the sales market village plot Ltd in the coming 18 quarters. These Beijing Mentougou district Mentougou 69,200 174,300 20,000 new launches are expected to have Yongding village plot high proposed prices (or pre-sale Source: Savills Research prices) ranging from RMB70,000 to RMB200,000 per sq m. Another two high-end villas, namely Xingchuang YiShu (兴创屹墅) located in Daxing high proposed prices. This is likely land supply plan. For instance, district and Donghuafu (东华府) to increase the price gap between two residential plots located in situated in Dongcheng district, are the overall market and high-end Sunhe village in Chaoyang district expected to be launched in the same segment. are currently under transaction period. with a reserve AV of RMB26,100 Despite a cooling residential land per sq m and RMB35,000 per sq This new supply, combined with market in the first half of 2014, we m respectively. Given their prime the undigested units launched over expect more active transactions locations and expected high the past few quarters, should lead in the residential land market over proposed prices under high land to high-end apartment transaction the rest of the year, given that more cost, these projects should enter volumes growing while allowing prime residential land plots are the supply pipeline of high-end average prices to continue to expected to be released onto the residences in the coming one to two appreciate given their expected market to fulfil the government’s years. 

04 Briefing | Beijing residential sales April 2014

TABLE 5 Future supply, 2H/2014–2015

Proposed price Project Location Type Opening date (RMB per sq m)

Wanliu Academy Haidian district Grade A apartment 2H/2014 120,000–150,000 (中赫万柳书院) Kun yu Palace Haidian district Grade A apartment 2H/2014 70,000–90,000 (琨御府) Central Park Plaza Chaoyang district Grade A apartment 2H/2014–2015 100,000–150,000 (中央公园广场) Sanlitun No.1 Chaoyang district Grade A apartment 2H/2014–2015 Around 200,000 (三里屯壹号) Kaisa Plaza Chaoyang district Grade A apartment 2H/2014–2015 N/A (佳兆业广场) Wangfujing Mansion Dongcheng district Grade A apartment 2H/2014–2015 N/A (王府井公馆) Xingchuang YiShu Daxing district High-end villa 2H/2014–2015 30,000–40,000 (兴创屹墅) Donghuafu Dongcheng district High-end villa 2H/2014–2015 N/A (东华府)

Source: Savills Research

Please contact us for further information Savills Research Savills Beijing Research Savills Residential Sales & Consultancy

James Macdonald Joan Wang Anthony McQuade Angela Lu Director, China Director Senior Director Associate Director +8621 6391 6688 +8610 5925 2042 +8610 5925 2002 +8610 5925 2068 [email protected] [email protected] [email protected] [email protected]

Savills plc Savills 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 500 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.

05