Property PROPERTY Being marked down nder the leadership of its former mayor Ruan the fast-growing city even if it meant paying a high Chengfa, Wuhan was once dubbed “the city of premium. Hong Kong-based Shui On Land, Shenzhen- digs” because over 5,500 construction sites based Gemdale, Guangzhou’s Yuexiu and Shenzhen were simultaneously scattered across the Investment are some of the developers that built up their Umetropolis. Many of these projects were meant for land bank rather heavily in Wuhan. residential purposes with the city’s population growing In 2016 there were 17 diwang sold in Wuhan. Diwang at a breakneck pace, having expanded 21% between 2008 generally refers to land parcels that are auctioned at a and 2017. Last year investment in housing projects, premium rate of over 40% with a consideration of at least despite a slowdown, reached a record high of Rmb184 Rmb500 million. It goes without saying that such high billion ($26.8 billion), approximating to 23% of the city’s prices need to be passed on to end-buyers – a quandary total fixed asset investment, or 68.5% of the overall for the developers thanks to a local government initiative property segment. to curb the prices of new projects. Developers have had to The abundance in supply, however, did not translate make sure that their new units are marketed at rates into stable prices. In fact, they have roughly quadrupled “guided” by the authorities or they will not be issued the in the last decade, with each square metre sold for an necessary presale permits. The policy was blamed for the average of around Rmb17,721 ($2,579) as of October 2018, unusual phenomenon whereby new homes were notwithstanding the slew of cooling measures released significantly cheaper than their second-hand equivalents. over the past two years. To get round the caps some developers also tried to Wuhan saw its latest upcycle begin in 2015 when the maintain profitability through charging so-called housing mania in tier-one cities spread outwards. Apart furnishing fees on top of the basic price. from speculative capital, deep-pocketed developers from In 2018 the government further tightened rules on other cities were also keen to increase their land bank in developers’ sales practices and mandated that some 76 SINOPOLIS: WUHAN PROPERTY Hankou district R E U T E R S SINOPOLIS: WUHAN 77 PROPERTY Wuhan skyli ne 7 8 SINOPOLIS: WUHAN PROPERTY projects should have at least 60% of their units allocated apartments. The business model relies on institutional to buyers with genuine demand, meaning those without lessors, which sign long-term lease contracts with a residential unit in Wuhan and who had no record of landlords, to manage, furnish, and sub-lease property home purchases within the city over the last three years. units that target millennials. The sector has thus far It also required ID verification of home buyers to ensure attracted a number of global private equity firms such A lottery system has been that the new units were sold to eligible parties. as New York-based Warburg Pincus and Tiger Global introduced to The restriction was presented as a solution to the Management from the US, thanks to strong allocate outcry that a lot of buyers with actual housing needs government support. apartment units could not get hold of a unit. After the city approved In Wuhan, a major state-owned bank is now offering to at some new drawing lots as a means to allocate housing, many found finance up to 90% of investments that are linked with developments that they were still priced out because of the staggering such rental projects over a period of 25 years. Apartment prepayment amounts demanded by real estate agents for lessors also get priority to obtain loans and advances. In entering the lottery system. addition an online home rental platform developed by In some cases, full payment, as opposed to the local government and a state-owned bank was downpayment, was demanded when a deal was being unveiled in November 2017 to add transparency to the negotiated. The measures have yet to really cool Wuhan’s nascent market. property market. But they have already deterred some While rental companies will be subject to the developers from bidding for land in the city, which might supervision of Wuhan’s housing security and further dent housing supply, and frustrate the management bureau, financial arrangements can be government’s plan to lure and retain skilled workers with facilitated through the centralised platform aided by home purchase rights and concessions (see page 98). facial recognition technology. Compared to the home ownership market, Wuhan’s Renting rental market is relatively stable. Yet the price range is Facing similar housing challenges to leading top-tier huge, between Rmb1,000 to Rmb30,000 per square metre cities, Wuhan was selected in July 2017 as one of the 12 depending on size and location. The average rent per cities to pilot a rental scheme for mid- to high-end square metre was Rmb33.23 per month as of August 2018. SINOPOLIS: WUHAN 79 PROPERTY Hot Spots New homes in Wuhan cost around Rmb16,069 per square metre as of August 2018, according to anjuke.com. Price controls aside, the average is brought down by the surge in supply in urban renewal areas or districts that are still under development and hence not as well supported by local amenities. Most prime locations such as Jianghan, Qiaokou and Wuchang tend to see new flats marketed for at least Rmb20,000 per square metre. Among the three districts, Jianghan fetches the highest price for luxury homes, thanks to its close proximity to the most well known shopping centre and business district where executives and senior managers tend to work. The new projects in the area, a lot of them high-rise estates, tend to be linked to metro stations, new shopping malls and office blocks that altogether form multipurpose complexes with gyms, entertainment facilities, restaurants and schools. One example would be Vanke Golden Age, due for completion in early 2019. Located at the Lingjiao Lake Station, it features six 40- floor buildings with mid-sized apartments of between 72-136 square metres. Its presale price stands at Rmb31,500 per square metre, of which Rmb2,000 is a ‘furnishing fee’. Greenland interior An equally expensive district is Zhongbei Road in Wuchang, which is designated to become the financial 80 SINOPOLIS: WUHAN PROPERTY district of Central China with the potential to host 40% of concession area, Jiang’an has been rejuvenated by a the city’s financial institutions and 200 headquarters. landmark known as Wuhan Tiandi completed in 2018. Many well known developers from around the country Developed by Shui On Land, it has a construction area including Evergrande, Greenland, Poly Property, Sunac of 1.44 million square metres, featuring the trendy and Yuexiu have properties in the area, where they Horizon Mall and blocks of Grade-A office towers tended to build larger units, and market them at above including the Ping An Finance Centre. The Wuhan Tiandi Rmb32,000 per square metre – a price tag that factors in area is now considered upmarket by locals – but housing having good schools in nearby Shuiguohu district. supply is restricted by government moves to protect Qiaokou in Hankou has attracted more attention in historic buildings. recent years, especially after its Gutian area completed its eight-year makeover in 2016. After hundreds of factories were relocated, Gutian is now one of the trendier areas in Wuhan’s housing prices Wuhan with new landmarks such as the IICG Wuhan Rmb/square metre Second-hand units Shopping Centre, which contains IKEA’s third megastore New units in China. Some housing projects that overlook the Han River in Gutian fetch above Rmb25,000 per square metre. 20k Looking beyond the traditional prime districts, a lot of buyers are eying the East Lake High-Tech Development Zone (also known as Optics Valley), which has been 15k promoted as a talent centre and Wuhan’s future economic engine. Since October 2017 the area’s new home prices 10k have risen 41% on average. C I Other up-and-coming districts include Jiang’an, T Y H Baishazhou and Changjiang New City. Jiang’an, in O 5k U S particular, saw some of its new units sold for nearly E 2013 2014 2015 2016 2017 2018 . C Rmb40,000 per square metre. Close to the former N SINOPOLIS: WUHAN 81 PROPERTY Stately homes Similar to other big cities in China, Wuhan developers now like to Greenland’s ambition to displace Shanghai Tower in Pudong as China’s sandwich luxury homes between hotels and offices inside a single tallest building. The half-finished Greenland project is expected to be skyscraper. The 480-metre Greenland Wuhan Centre, for instance, has 20 completed in June 2020. floors of serviced apartments on the 66th-85th floors, which sit above Outside of the downtown area there is a bigger supply of lower rise offices but below the Ritz Carlton hotel. Each floor contains 6,9 or 12 units units fit for families. A project called Guocai Guanglifang in the Optics depending on their sizes, which range between 251-504 square metres. Valley, for instance, has met with enthusiasm. A 190 square metre two- Targeting senior executives, prominent individuals, and the super-affluent, storey house in the estate, marketed at Rmb5.7 million (or Rmb30,000 they are sold for Rmb80,000-100,000 per square metre. Yet that has yet per square metre), features a foyer, a study, a guestroom, a kitchen, a to factor in the monthly management fee of around Rmb35 per square sitting room and a dining room on the ground floor, and two bedrooms metre.