Savills World Research

Briefing Residential sales October 2015

Image: COFCO Ruifu, Chaoyang SUMMARY As consumer confidence returns to the market, the first-hand mass market witnessed significant growth in both supply and transaction volumes in Q3/2015.

 Beijing’s first-hand residential  Grade A apartment transaction investors. As a result, it is expected that market continued to display a positive volumes increased 13.9% year-on- transaction volumes will continue to performance in Q3/2015. Supply year (YoY) to 450 units. The launch of pick up and that prices will grow mildly levels grew 28.6% quarter-on-quarter a number of high quality projects in throughout the remainder of 2015. (QoQ) to approximately 2.7 million sq Q3/2015 pushed average prices up to m, while transaction volumes jumped RMB75,200 per sq m, representing a 38% QoQ to around 2.8 million sq m, growth of 9.8% QoQ and 15.6% YoY. bringing the year-to-date (YTD) volume “With the stock market continuing to approximately 6.3 million sq m.  Spurred on by the influx of new Supported by growing demand, the first- supply, high-end villa transaction to fluctuate, along with the falling hand residential price index registered volumes increased 50% QoQ to 303 prices of residential properties an increase of 3.1% QoQ by the end of units, while average prices grew 4.1% September 2015. YoY to RMB53,700 per sq m by the end in second-tier cities, the Beijing of Q3/2015.  The high-end market welcomed an residential market continues to influx of supply in the third quarter of  With the stock market continuing stand out as a less risky investment 2015. Four Grade A apartments and to fluctuate, along with falling prices seven high-end villas (including new of residential properties in second- vehicle for many investors.” phases of existing projects) entered the tier cities, first-tier city residential sales market, contributing a total of 705 markets continue to stand out as a Jack Xiong, Savills Research& Consultancy units and 635 units, respectively. less risky investment vehicle for many savills.com.cn/research 01 Briefing |Beijing residential sales October 2015

Policies units); Oak Bay (橡树湾) in Haidian per sq m, representing a growth of On the back of the recent stimulation district (184 units – new phase) 9.8% QoQ and 15.6% YoY. Notably, policies by the government, followed and One Central (使馆壹号院) in a new project, One Central (使馆壹号 by the loosening of housing loans and Dongcheng district (210 units). 院) in Dongcheng district, proposed cutting of interest rates four times asking prices in the RMB133,000 this year, the Beijing mass-residential Steady demand from high-net-worth to RMB177,000 per sq m range, an market appears to be regaining individuals (HNWIs), combined with indication of the market’s movement stability as consumer confidence new supply entering the market, towards an era of average prices of returns. As a result, Beijing’s mass- saw Grade A apartment transaction over RMB100,000 per sq m. residential market is forecasted to volumes increase 13.9% YoY to 450 experience a positive performance in units by the end of the quarter. The First-hand high-end villa the remaining quarter of 2015. launch of a number of high quality market projects during the period pushed The high-end villa market welcomed First-hand mass-market average prices up to RMB75,200 an influx of supply in the third overview On the back of the recent stimulation GRAPH 1 policies by the government, followed First-hand mass-market residential supply, by the loosening of housing loans absorption and price index, Q1/2006–Q3/2015 and cutting of interest rates four times this year, the Beijing mass- Supply (LHS) Absorption (LHS) Price index (RHS) residential market appears to be 7 350 regaining stability as consumer 6 300 confidence grows.

5 250

Mirroring last quarter’s performance, = 100 2005 June both supply and transaction volumes 4 200 witnessed significant growth in the third quarter. Supply levels increased 3 150 million sq m 28.6% QoQ to approximately 2.7 2 100 million sq m, while transaction

volumes jumped 38% QoQ to 1 50 around 2.8 million sq m, bringing the YTD volume to approximately 6.3 0 0

million sq m. Supported by growing 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 Q3 Q4 Q1 Q2 Q3 demand, the first-hand residential 06 07 08 09 10 11 12 13 14 15 price index registered an increase of Source: Beijing Real Estate Transaction and Management Bureau, Beijing Municipal Bureau of Statistics, Savills Research 3.1% QoQ by the end of September 2015. As a result of growing GRAPH 2 consumer confidence, Beijing’s First-hand Grade A apartment market supply, mass-residential market is forecasted absorption and price, Q1/2006–Q3/2015Figure 2 EN to experience positive performance in the remaining quarter of 2015. Supply (LHS) Absorption (LHS) Price (RHS) 3,500 Units 105,000

First-hand Grade A 3,000 90,000 apartment market Looking to capitalise on the 2,500 75,000 RMB per sq m RMB per sq traditional peak purchasing season of 2,000 60,000 September, many developers timed

their entrance into the sales market Units 1,500 45,000 for Q3/2015. The influx of supply saw 1,000 30,000 four Grade A apartments enter the market, contributing a total of 705 500 15,000 units. The projects included: Zhen Garden (臻园) in Chaoyang district 0 0 (173 units); Oceanwide International 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 Q3 Q4 Q1 Q2 Q3 06 07 08 09 10 11 12 13 14 15 (泛海国际) in Chaoyang district (138 Source: Savills Research Page 1

02 Briefing | Beijing residential sales October 2015

TABLE 1 New high-end apartments, Q3/2015

Zhen Garden Oceanwide International Oak Bay One Central Project （臻园– new phase） （泛海国际– new phase） （橡树湾 – new phase） （使馆壹号院）

Location Chaoyang district Chaoyang district Dongcheng district

Developer CMPD & Wharf China Oceanwide Estate China Resources Land Sunac

Pre-sale price 57,000–65,000 80,000–86,000 77,000–79,000 133,000–177,000 (RMB per sq m)

Units 173 138 184 210

Source: Savills Research

TABLE 2 New high-end villas, Q3/2015

Wonderland Mansion The Capital Hill The Masterpiece 1688 COFCO Ruifu Project （燕西华府 – new phase） （西山艺境 – new phase） （新世界丽樽 – new phase） （中粮•瑞府 – new phase）

Location Mentougou district Chaoyang district

Developer Yicheng Real Estate Gemdale & Powerchina New World China Land COFCO Property

Pre-sale price 38,000–41,000 42,000–79,000 40,000–48,000 70,000–200,000 (RMB per sq m)

Units 184 36 105 61

Vermont Hills XANADU Positano Vita Project （凯德•麓语） （首创禧瑞墅） （华润•润西山 – new phase）

Location Shunyi district Mentougou district

Developer Capitaland Beijing Capital Land China Resources

Pre-sale price 41,000–50,000 30,000–43,000 45,000–62,000 (RMB per sq m)

Units 86 92 71

Source: Savills Research

03 Briefing | Beijing residential sales October 2015

quarter of 2015, with seven high- market. While steady demand from residential land plots accounted for the end villas (including the new phases HNWIs is expected to continue to majority of total transaction volumes, of existing projects) entering the support price appreciation in the and the most notable deal of the market, contributing a total of 635 area, take-up is expected to slow quarter was the Sunhe plot located in units. Spurred on by the influx of new down as the market struggles to Chaoyang district, which was acquired supply, high-end villa transaction digest the new inventory levels. through a joint acquisition for a total volumes increased 50% QoQ to consideration of RMB6.48 billion. 303 units. With strong demand from Residential land market HNWIs, average prices continued to Beijing’s land market transaction Market outlook grow by 4.1% YoY to RMB53,700 per volumes increased 78.9% QoQ to With the stock market continuing to sq m by the end of Q3/2015. RMB35.9 billion. Returning consumer fluctuate, along with falling prices confidence in the residential market, of residential properties in second- Shunyi district received a significant combined with Beijing continuing tier cities, first-tier cities’ residential amount of the new supply, with two to be viewed as one of the most markets continue to stand out as a projects, The Masterpiece 1688 (新 strategically important markets, less risky investment vehicle for many 世界丽樽) and XANADU (首创禧瑞 has led to strong interest in land investors. As a result, it is expected 墅), adding close to 200 units to the acquisition in the capital. As a result, that transaction volumes in the first- hand residential market will continue to pick up and that prices will grow mildly GRAPH 3 throughout the remainder of 2015. First-hand high-end villa market supply, absorption and price, Q1/2006–Q3/2015Figure 3 EN Seven high-end apartments and three high-end villas are scheduled Supply (LHS) Absorption (LHS) Price (RHS) to enter the market in the coming 15 900 90,000 months, of which the majority are 800 80,000 expected to propose prices higher 700 70,000 than RMB100,000 per sq m. Overall transaction volumes are expected to 600 60,000 m RMB per sq increase given growing demand from 500 50,000 HNWIs, although the selling rates of

Units 400 40,000 individual projects are expected to

300 30,000 slow down amid fiercer competition.

200 20,000 Meanwhile, overall average prices are anticipated to steadily increase 100 10,000 given the high proposed prices of 0 0 new projects, and continue to move 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 Q3 Q4 Q1 Q2 Q3 towards an era of amounts over 06 07 08 09 10 11 12 13 14 15 RMB100,000 per sq m.  Source: Savills Research Page 1

TABLE 3 Major residential land transactions, Q3/2015

Planned GFA Consideration Accommodation value Plot District Buyer (sq m) (RMB billion) (RMB per sq m)

Poly & Beijing Capital Sunhe plot Chaoyang district 143,685 6.48 56,000 Development

China Railway Construction Shiliuzhuang plot Fengtai district 166,387 5.03 34,000 & Franshion Properties

Poly & Beijing Capital Dongba plot Chaoyang district 159,783 4.25 60,000 Development & Longfor

Source: Savills Research, Beijing Land Consolidation and Reserve Centre

04 Briefing | Beijing residential sales October 2015

TABLE 4 Future supply, Q4/2015–2016

Scheduled Proposed price No. Project (EN) Project (CN) Location Property Type Supply (units) launch time (RMB per sq m)

1 Ocean Epoch 远洋天著春秋 Shijingshan Villa TBD Q4/2015 TBD

2 One Sino Park 北京壹号院 Lufthansa Apartment TBD Q4/2015 150,000–250,000

3 Central Park Plaza 骏豪•中央公园广场 Chaoyang Park Apartment 49 Q4/2015 100,000–150,000

4 Sanlitun No.1 三里屯壹号 Sanlitun Apartment 48 Q4/2015 100,000–150,000

5 Evergrande Huafu 恒大华府 Dongba Apartment 126 Q4/2015 Around 100,000

Mandarin Court East Chang’an 6 Apartment TBD 2016 TBD Phase II 长安太和二期 Avenue

7 La Vita E Bella 保利首开天誉 Dongba Villa 116 2016 Around 100,000

8 Kunlun Mansion 华润昆仑域 Fengtai Apartment TBD 2016 TBD

9 Peking Mansion 华润北平府 Dongcheng Villa (Sihe yard) TBD 2016 TBD

10 Kaisa Plaza 佳兆业广场 CBD Apartment 273 2016 100,000–150,000

Source: Savills Research

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

James Macdonald Jack Xiong 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 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.

05