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savills.com.cn/research 01
Briefing Residential sales July 2015
Savills World Research Shanghai
New commodity residential supply increased 57% quarter-on-quarter (QoQ) to 2.9 million sq m in Q2/2015.
First-hand commodity residential transaction volumes rebounded 111.5% in Q2/2015, totalling 4.1 million sq m.
Average transaction prices increased 12.5% QoQ to RMB32,100 per sq m as a result of high-end transactions accounting for a higher proportion of the total, a new high for the Shanghai market.
Two high-end apartment projects, Jinmao Palace and Fuxing Royale, were
launched in Q2/2015, adding 484 new units to the sales market.
High-end apartment transaction volumes surged 150.7% QoQ to 397,200 sq m, the highest quarterly figure on record.
First-hand high-end apartment transaction prices increased 2.9% on an index basis to an average of RMB73,200 per sq m in Q2/2015.
Local governments are likely to remain conservative in the second half of the year as national policies, a volatile stock market and resurgent buying demand cloud future market prospects.
“Easing monetary control accelerated market recoveries in leading cities, while lower-tier cities continue to face a situation of oversupply.” James Macdonald, Savills Research
SUMMARYThe Shanghai residential sales market rebounded with strong growth in volumes and pricing recorded in the second quarter, amid improving confidence among home seekers.
Image: Fuxing Royale, Huangpu
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02
Briefing | Shanghai residential sales July 2015
Market overviewThe second quarter of 2015 saw
significant recovery in the Shanghai
residential sales market, primarily as
a result of seasonal factors, policy
relaxations and, until mid-June, a
red-hot stock market. City-wide new
commodity residential transaction
volumes rebounded 111.5% in
Q2/2015, while second-hand
residential transaction volumes
surged 124.4% QoQ to 8.3 million sq
m, surpassing the transaction record
of 6.5 million sq m in Q1/2013.
Following the previous rate cut in
February 2015, the People’s Bank
of China (PBoC) announced another
two interest rate cuts by 25 basis
points (bps) in May and June 2015,
lowering the five-year lending rate to
5.4% (4.85% for one-year lending).
This, along with other favourable
policies such as lowering housing
provident fund (HPF) lending rates,
has renewed homebuyer enthusiasm
and given developers a bit more
breathing room.
Developers are beginning to display
more confidence in the short- to mid-
term prospects of the local market.
The recent Shanghai Property
Exhibition held over the May holidays
hosted a wider array of Shanghai
properties than last year, while a
larger proportion of the projects were
positioned at the mid- to high-end
of the market. With fewer discounts
offered and a larger proportion of
demand coming from households
looking to upgrade their premises,
transaction prices hit a historical high
of RMB32,100 per sq m in Q2/2015,
up 12.5% QoQ and 20.4% year-on-
year (YoY).
Overall commodity1 residential marketFirst-hand commodity residential
transaction volumes rebounded
1 Commodity housing excludes residential properties designated for relocated residents under urban redevel-opment plans, as well as economical housing.
111.5% in Q2/2015, totalling 4.1
million sq m, primarily as a result of
seasonal factors, policy relaxations
and, until mid-June, a red-hot stock
market. Demand outstripped supply
by 1.2 million sq m, resulting in
a continuous decrease of unsold
inventory to 12.2 million sq m by the
end of Q2/2015.
Many high net worth individuals
(HNWIs) are believed to have cashed
out of their stock market holdings
in June as share prices reached
record highs not seen since 2007,
taking their gains out in order to
upgrade their premises or invest
in new properties. Consequently,
upgrade demand accounted for an
unusually large percentage of overall
transactions.
Units priced over RMB60,000 per sq
m accounted for a larger percentage
(8.9%) of total transactions, leading
to a surge in transaction prices to
RMB32,100 per sq m in Q2/2015,
up 12.5% QoQ and 20.4% YoY,
a historical high for the Shanghai
market.
Unsold inventory levelsUnsold inventory levels have now
fallen for two consecutive quarters
as a result of strong demand levels
on the back of supportive measures
introduced by central and local
governments over the last year.
Unsold first-hand residential
inventory, including both commodity
and economical housing, fell to 12.2
Source: People's Bank of China, Savills Research
GRAPH 1
Base lending rate
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%6 mth to 1 yr more than 5 yr
Source: Shanghai Real Estate Transaction Centre, National Bureau of Statistics, Savills Research 2This price index is based on 70 main city house indices published by NBS.
Supply Transactions Average price Price index
sq m QoQ (%) sq m QoQ (%) RMB per sq m QoQ (%) (Dec 2010 = 100) QoQ (%)
Apartment 2,565,900 +69.0 3,633,500 +111.4 31,500 +11.1 - -
Villa 312,200 -1.1 510,000 +111.8 36,300 +21.5 - -
Overall 2,878,100 +57.0 4,143,400 +111.5 32,000 +12.5 125.3 +5.8
TABLE 1
First-hand commodity residential market by property type, Q2/2015
Source: Shanghai Real Estate Transaction Centre, Savills Research
GRAPH 2
First-hand commodity residential market supply, transactions and prices Q1/2006–Q2/2015
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
0
1
2
3
4
5
6
7
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
RM
B per sq m
mill
ion
sq m
Supply (LHS) Transaction volume (LHS) Average transaction price (RHS)
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savills.com.cn/research 03
Briefing | Shanghai residential sales July 2015
million sq m, with more than 82,900
new units on the sales market at the
end of Q2/2015, thereby shortening
the digestion period to 5.8 months
from 9.1 months in Q1/2015.
Beating the previous transaction
record of 6.5 million sq m in
Q1/2013, second-hand residential
transaction volumes soared 124.4%
QoQ to total 8.3 million sq m in
Q2/2015. At the same time, average
transaction prices hit a new record of
RMB25,000 per sq m, up 8.4% QoQ
and 19.1% YoY.
Listings of second-hand properties
increased in the second quarter as
homeowners planning to upgrade
their premises listed their existing
properties. Total second-hand listings
increased to nearly 8.8 million sq
m, or 92,500 units, by the end of
Q2/2015.
High-end residential sales marketFirst-hand high-end apartment
market
Developers are believed to be
accelerating the launch of new high-
end properties in order to capitalise
upon the more buoyant market
condition, while still endeavouring
to offload unsold inventory. Q2/2015
saw the launch of two new projects,
Jinmao Palace and Fuxing Royale,
adding 134,900 sq m of new supply,
while the first quarter saw one new
project and one new phase in an
existing project come onto the
Source: Shanghai Real Estate Transaction Centre, Savills Research
GRAPH 3
Transaction volumes by price
3%
3%
2%
3%
3%
3%
3%
3%
4%
4%
2%
2%
2%
3%
3%
3%
3%
4%
5%
5%
6%
9%
75%
80%
85%
90%
95%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
10 11 12 13 14 15
Below RMB30,000 psm RMB30-40,000 psm RMB40-50,000 psmRMB50-60,000 psm Above RMB60,000 psm
market, indicating the acceleration of
launches.
Jinmao Palace and Fuxing Royale
were launched in April and June
2015 respectively, bringing 484
new units onto the sales market.
Jinmao Palace, located in Daning
in Zhabei district, is a new high-end
residential complex developed by
Franshion Properties. The land plot
was originally acquired in January
2014 for RMB10.1 billion, the most
expensive pure residential plot
transacted in 2014 in terms of total
consideration.
New high-end apartment transaction
volumes surged 150% QoQ to
397,200 sq m. Average transaction
prices increased2.9% QoQ on
an index basis to an average of
RMB73,200 per sq m, with 7% QoQ
growth recorded in primary areas.
Shanghai’s high-end residential
market witnessed outstanding
sales performances in both new
launches and existing projects in
Q2/2015. Jinmao Palace ranked
as the top sales project in terms of
total consideration at RMB2.4 billion
during the first half of 2015.
Tomson Riviera, a luxury apartment
project, sold a 1,207 sq m penthouse
for RMB243.3 million (RMB201,600
per sq m) in June 2015, a historical
high in terms of total consideration
for an individual unitin the Shanghai
market. This is said to be the second
Source: Shanghai Real Estate Transaction Centre, Savills Research 3Core districts: Changqing, Jing'an, Xuhui and Huangpu.
Non-core districts: Hongkou, Putuo, Zhabei, Yangpu, Minhang and Pudong (including Nanhui)
Fringe: Baoshan, Fengxian, Chongming, Jinshan, Qingpu and Songjiang.
GRAPH 4
Second-hand residential sales market3 transactions and prices, Q1/2007–Q2/2015
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0
1
2
3
4
5
6
7
8
9
Q1
Q2
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2007 2008 2009 2010 2011 2012 2013 2014 2015
RM
B per sq m
mill
ion
sq m
Fringe district transaction volume (LHS) Non-core district transaction volume (LHS)Core district transaction volume (LHS) Overall average price (RHS)Core district price (RHS) Non-core district price (RHS)Fringe district price (RHS)
GRAPH 5
First-hand high-end apartment market4 supply, Q1/2005–Q2/2015
0
100,000
200,000
300,000
400,000
500,000
600,000
Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15
sq m
Primary area Secondary area Emerging area
Source: Shanghai Real Estate Transaction Centre, Savills Research 4Primary: Well-established luxury residential enclaves within the inner ring road ( Huaihai Road (M),
Lujiazui Riverside, Xinhua Road, etc).
Secondary: Developing high-end residential enclaves within the middle ring road (Huamu,
Dapuqiao, Gubei, etc).
Emerging: Emerging high-end residential enclaves outside the middle ring road (New Jiangwan
Town, Sanlin, Waigaoqiao, etc).
TABLE 2
Second-hand residential market by property type, Q2/2015
Transactions Average transaction price
sq m QoQ (%) RMB per sq m QoQ (%)
Apartment 7,931,000 +124.8 24,800 +8.8
Villa 391,500 +115.4 27,900 +3.6
Overall 8,322,500 +124.4 25,000 +8.4
Source: Shanghai Real Estate Transaction Center, Savills Research
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Briefing | Shanghai residential sales July 2015
TABLE 3
Top five bankuai/areas by first-hand apartment transaction prices, Q2/2015 vs Q1/2015
Bankuai District Average transaction price(RMB per sq m)
Q2/2015
Lujiazui Riverside Pudong 143,300
Huaihai Road (M) Huangpu 123,200
Xinhua Road Changning 115,400
Nanjing Road (W) Jing'an 98,100
Hengshan Road Xuhui 91,400
Q1/2015
Huaihai Road (M) Huangpu 125,200
Lujiazui Riverside Pudong 125,000
Nanjing Road (W) Jing'an 93,500
Xinhua Road Changning 86,700
Huangpu Riverside Huangpu 85,600
Source: Shanghai Real Estate Transaction Centre, Savills Research
purchase by the buyer within the
project.
Second-hand, high-end apartment
market
Second-hand, high-end apartment
transaction volumes surged 162.1%
in Q2/2015, reaching highs previously
seen in 2009. Transaction prices
recorded an increase of 2.3%
QoQ on an index basis, averaging
just over RMB59,700 per sq m in
Q2/2015.
Given that the basket of 20
properties tracked covers roughly
3.3 million sq m and 83,200 sq m
changed hands in Q2/2015, this
would equate to each property
changing hands on average every ten
years.
Project focusFuxing Royale (复兴珑御)
Located on Xizang Road (S) in
Huangpu district, Fuxing Royale is
a brand new high-end apartment
complex developed by Wanye Source: Shanghai Real Estate Transaction Centre, Savills Research
GRAPH 6
First-hand high-end apartment market transactions and prices, Q1/2005–Q2/2015
0
50
100
150
200
250
300
350
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
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Q1
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Q1
Q2
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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)
GRAPH 7
Second-hand, high-end apartment market5 transactions and price index, Q1/2006–Q2/2015
0
50
100
150
200
250
300
0
20,000
40,000
60,000
80,000
100,000
120,000
Q1
Q2
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Q3
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Q1
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Q3
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Q1
Q2
Q3
Q4
Q1
Q2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
sq m
Transaction volume (LHS) Price index (RHS)
Q1/06 = 100
Source: Shanghai Real Estate Transaction Centre, Savills Research 6Based upon a basket of 20 high-end apartment projects.
TABLE 4
High-end apartment supply, Q2/2015
ProjectLaunch
dateArea Developer District
Transaction price (RMB per sq m)
GFA(sq m)
Total no. of units
Average unit size (sq m)
No. of units sold
The Palace, 2nd phase 嘉御庭, 第二期 May Primary K.Wah Xuhui
80,000-100,000 31,500 185 170 48
Fuxing Royale复兴珑御 Jun Primary
Wanye Enterprise Huangpu
85,000-95,000 26,000 180 145 34
The Bound of Bund 华润外滩九里苑 Jun Primary
China Resources Huangpu
100,000 (asking) 11,000 106 100 -*
Jinmao Palace金茂雅苑 Apr Secondary Franshion Zhabei
67,000-77,000 38,700 304 130 281
The Eight, 4th batch 长风雅仕名邸, 第四批 Apr Secondary Donghang Putuo
45,000-55,000 1,700 6 280 2
One Park, 2nd batch虹桥尚嘉苑, 第二批 May Secondary Longlife Minhang
80,000-200,000 30,000 81 370 20
West Shore, 4th batch 保利西岸名轩, 第四批 Jun Secondary Poly Xuhui
70,000-110,000 6,500 28 230 19
Magnolia Garden, 5th batch绿城葛洲坝臻园, 第五批 Apr Emerging
CGGC & Greentown
&SunacPudong 40,000-48,000 425 2 210 2
Source: Shanghai Real Estate Transaction Centre, Savills Research *No transactions registered in the SRETC system as of Q2/2015.
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Briefing | Shanghai residential sales July 2015
05
GRAPH 8
Residential land transaction area (buildable area) and AV, Q1/2007–Q2/2015
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
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Q3
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Q1
Q2
2007 2008 2009 2010 2011 2012 2013 2014 2015
RM
B per sq m
mill
ion
sq m
Land transaction GFA (LHS) Accommodation value (RHS)
Source: Shanghai Municipal Bureau of Planning and Land Resources; Savills
Research
Enterprise Laoximen Real Estate. The
project enjoys easy access to the
Laoximen Station (metro lines 8 and
10) and is within walking distance of
Xintiandi.
The project launched the first phase
of 180 units in Towers 1 & 2 in June
2015, adding 26,000 sq m to the
sales market. The main offerings
were the two-bedroom (88-141 sq
m) and the four-bedroom (241 sq m)
units.
Current asking prices start from
RMB90,000 per sq m and by 13
July 2015, 34 units had been sold
with transaction prices averaging
RMB88,500 per sq m. Fully-fitted
units are expected to be handed over
in Q2/2017. The northern component
of the project is now in the planning
stages.
Residential land marketAs a result of more strictly
controlled land supply and a more
positive outlook for the residential
sales market, Q2/2015saw fierce
competition for new land plots
among developers, leading to
higher premiums and record high
accommodation values (AV).
Ten residential land plots (including
pure residential and mixed-use) were
transacted in Q2/2015, totalling one
million sq m of buildable area, up
13% from Q1/2015. The average AV
increased 67.9% QoQ to RMB24,800
per sq m, while the average premium
over the reserve price reached
58.8%, up 34.6 ppts QoQ.
Shanghai witnessed a new AV record
in April 2015 for plots outside of
the Outer Ring Road as two pure
commodity residential land plots in
Tangzhen in Pudong were acquired
by Greattown Holdings for a total
consideration of RMB5.1 billion.
Many well-known developers
participated in the auction, including
Yanlord, Gemdale and Sunac.
Plot D-03-05a has a site area of
61,200 sq m and a plot ratio of 1.7
and was sold at an AV of RMB27,900
per sq m. Plot D-04-07 has a site
area of 52,200 sq m and a plot
ratio of 1.4and was sold at an AV of
RMB29,700 per sq m. Surrounding
residential projects are currently
selling for RMB40-45,000 per sq m.
Another significant deal was the
joint acquisition by CR Land and the
Huafa Group of a mixed-use land
plot in Zhabei district on 3 June 2015
for RMB8.8 billion, representing an
AV of RMB38,100 per sq m. Two
months previously, this consortium
had already acquired a mixed-
use land parcel adjacent to this
plot for RMB7.1 billion. These two
acquisitions represented the highest
total considerations in the land
market in the first half of the year.
Residential sales market outlookWhile the volatility in the stock
market in recent weeks could lead
to suppressed transaction activity,
the overall transaction market is
still expected to remain positive in
2H/2015 due to seasonal factors,
the generally positive sentiment
and strong end-use and upgrading
demand.
TABLE 5
Top residential land deals by AV, Q2/2015 vs Q1/2015
Source: Shanghai Municipal Bureau of Planning and Land Resources, Savills Research
Date DistrictSite area
(sq m)GFA
(sq m)Plot ratio
Transacted price
(RMB million)
Transacted price (RMB
million)
Premium (%)
AV (RMB per sq m)
Q2/2015
Jun Zhabei 87,197 231,073 2.7 6,932 8,795 26.9 38,062
Jun Yangpu 32,360 97,079 3.0 2,364 3,454 46.1 35,579
Jun Hongkou 8,916 20,508 2.3 410 652 59.0 31,793
Quarter - - 537,090 1,038,697 1.9 17,484 25,784 58.8 24,823
Q1/2015
Mar Zhabei 76,315 202,234 2.7 6,067 7,052 16.2 34,871
Feb Minhang 46,201 92,401 2.0 887 1,735 95.6 18,777
Feb Pudong 19,942 49,855 2.5 696 696 0 13,951
Quarter - - 529,687 918,941 1.7 11,098 13,584 24.2 14,782
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Briefing | Shanghai residential sales July 2015
Please contact us for further information Savills Research Savills Residential Sales
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 MacdonaldDirector, China+8621 6391 [email protected]
Siu Wing ChuDeputy Managing Director+8621 6391 [email protected]
Shirley TangDirector+8621 6391 [email protected]
Michelle ZhouAssociate Director+8621 6391 [email protected]
Housing policies are expected to
remain conservative in 2H/2015.
Despite the fine tuning of housing
purchase restrictions (HPRs) for
qualified non-local talents, HPRs for
the mass market are expected to
remain enforced unless the market
cools significantly.
Postponed from Q2/2015, Bund
House in Huangpu Riverside is
expected to release its third phase
to the market in Q3/2015. The top-
floor penthouse unit is said to have
an asking price of RMB380,000 per
sq m, making it the most expensive
residential unit in Shanghai should
it sell.
A combination of factors is pushing
up land prices to levels close to that
of surrounding property prices. The
two-speed market that currently
exists in China between the first-tier
cities and lower-tier cities has meant
that developers have been jostling
to get a foothold in the Shanghai
residential development market. A
more conservative approach to land
sales by the government means there
is less land available for auction.
Higher residential prices means
that it is more expensive to clear
sites where adequate market rated
compensation has to be provided to
existing property owners. Also, an
upward trajectory in terms of pricing
means that developers, in their land
bidding, are incorporating further
appreciation in residential prices
during the development phase into
their land valuations.
Developers have to evolve as
they are faced with a tough
market, increasing costs and
project capitalisation, as well as
finding it more difficult to find low
cost financing. Developers are
forming strategic partnerships
with other developers, developing
understandings with financing
companies and exploring
opportunities online to sell and
finance projects. While there has
been market consolidation in the
past, we are likely to see it continue
going forwards and even speed up
further.