shanghai – january 2021 market in residential sales ......shanghai +8621 6391 6688 shirley.tang@...

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Savills Research

Residential SalesShanghai – January 2021

Prices hit record highsLimited supply pushed up high-end residential prices.

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 It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent.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 [email protected]

RESEARCH

Please contact us for further information

Savills team

“Developers limited by the “345 rule” are actively promoting projects in the mass market, while the sales and subscription rates of high-end projects are heated due to home buyers’ high expectations.” JAMES MACDONALD, SAVILLS RESEARCH

• Overall first-hand commodity residential supply fell 8.9% quarter-on-quarter (QoQ) to 2.4 million sq m, up 28.5% year-on-year (YoY).

• First-hand commodity residential transaction volumes decreased 1.0% QoQ to 2.9 million sq m, up 48.8% YoY.

• Average transaction prices decreased 4.4% QoQ to RMB52,573 per sq m, down 2.8% YoY.

• First-hand commodity residential transaction volumes increased 21.0% YoY to 9.2 million sq m for the full-year 2020; meanwhile, supply totalled just 7.5 million sq m as the market shifts in favour of sellers.

• First-hand high-end apartment supply totalled roughly 110,000 sq m in Q4/2020, down 4.5% QoQ. Apart from new projects like West Bund Park and Art Park, new batches of existing projects have also been added to the market.

• First-hand high-end apartment transaction prices increased 1.2% in Q4/2020 to an average of RMB116,300 per sq m, up 5.7% YoY.

• Thirteen land plots with for-sale residential components were sold in Q4/2020. Ten of the plots were majority for-sale residential with a combined site area of 476,000 sq m, buildable area of 794,000 sq m and an average accommodation value (AV) of RMB35,047 per sq m.

Shirley Tang Senior DirectorShanghai+8621 6391 [email protected]

Michelle Zhou DirectorShanghai+8621 6391 [email protected]

Siu Wing ChuChief Executive Officer China+8621 6391 [email protected]

RESIDENTIAL SALES

CENTRAL MANAGEMENT


MARKET FOCUSTightening on housing-related loansCeilings on property loans by banks were announced by the People’s Bank of China and the China Banking and Insurance Regulatory Commission on the last day of 2020. Banks, along with other financial institutions, are categorised into five tiers by their institution type, assets under management and other characteristics. Effective January 1st, 2021, the new regulation aims at tightening the supply end of financing, while the “345 rule” announced earlier 2020 was more of a control on the demand end.

The overall level of restrictions is set to a similar level to the existing bank loan ratios in 2020. For banks exceeding the set lines, a grace period of two years allows them to adjust the ratio of property-related loans to other sectors. The new regulation is assumed to curb housing speculation as mortgage loans grew from 14.3% of total loans in 2015 to 21.7% in 2020. Meanwhile, property/developer loans have been stable at 7.2%. Rental housing related loans are excluded while calculating the limited loan quota, which indicates continued support in the rental housing sector.

OVERALL COMMODITY RESIDENTIAL MARKETFirst-hand Market - Both supply and transaction maintained their momentum in Q4/2020 after the market’s big surge in Q3/2020. First-hand commodity residential supply decreased 8.9% QoQ to 2.4 million sq m, though up 28.5% YoY. First-hand commodity residential transaction volumes decreased 1.0% QoQ to 2.9 million sq m, though up 48.8% YoY.

Average transaction price fell 4.4% QoQ and 2.8% YoY to an average of RMB52,573 per sq m. Transaction areas within the middle ring road decreased 20.7% QoQ, while areas between the outer and suburban ring road increased 13.7% QoQ, accounting for more than half of the total transacted area.

First-hand commodity residential transaction volumes increased 21.0% YoY to 9.2 million sq m for the full-year 2020, a new high since 2016. Average transaction price during the full-year 2020 increased 3.2% to RMB55,739 per sq m.

Second-hand Market - The surplus demand in the first-hand market has increased transactions in the second-hand market during Q4/2020. Market demand brought total transaction volume up 25.7% QoQ and 82.7% YoY to 7.9 million sq m. Projects listing prices of school districts and areas with no new supply surged as market heated up. Listing prices of some properties in Yuqiao and Qiantan increased about 50% compared to earlier 2020. With an increase of upgrade demand in the second-hand market, the average transaction price was pushed up to RMB42,400 per sq m, up 2.6% QoQ and 10.3% YoY. Average transaction price in Pudong and Huangpu both increased 14% YoY, while average transaction price in Qingpu increased 18% YoY, exceeding RMB30,000 per sq m thanks to the influence of the Hongqiao Transportation Hub and Metro Line 17.

HIGH-END RESIDENTIAL SALES MARKET First-hand high-end apartment supply totalled approximately 110,000 sq m in Q4/2020, a decrease of 4.5% QoQ and 28.7% YoY. New supply came from newly launched West Bund Park and Art Park, as well as batches of existing projects such as the Greenland Bund Centre.

2020 witnessed large new supply from traditional high-end residential zones like Xintiandi, Huangpu and Lujiazui Riviera. New projects launched in high-end areas like Biyun and Gubei, which haven’t seen new supply in a decade, offered home buyers specifically looking in those areas alternative options to buying second-hand homes.

First-hand high-end apartment transaction volumes decreased by 24.5% in Q4/2020, totalling 169,000 sq m, though up 29.4% YoY

GRAPH 1: First-Hand Commodity Residential Market Supply, Transaction Volume And Prices By Quarters, 2014 to 2020

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GRAPH 2:Second-Hand Residential Sales Market Transactions And Prices, Jan/2016 to Oct/2020

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Source Shanghai Real Estate Trading Center, Savills Research


2020Q4 2020

APARTMENT VILLA OVERALL APARTMENT VILLA OVERALL

SUPPLYSQ M 2,274,743 104,115 2,378,858 7,140,855 407,985 7,548,841

YoY (%) 30.8% -7.4% 28.5% 1.8% -31.3% -0.8%

TRANSACTIONSSQ M 2,616,625 257,242 2,873,867 8,229,044 988,257 9,217,301

YoY (%) 49.6% 41.5% 48.8% 22.1% 12.7% 21.0%

AVERAGE PRICERMB PSM 52,167 56,695 52,573 55,371 58,799 55,739

YoY (%) -2.6% -4.6% -2.8% 2.8% 6.6% 3.2%

Residential Sales

TABLE 1:First-Hand Commodity Residential Market By Property Type



GRAPH 4: First-Hand, High-End Apartment Market Transaction Volumes And Prices, Q1/2016 to Q4/2020

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GRAPH 5: For-Sale Residential Land Transaction Area (Buildable Area) And AV, Q1/2016 to Q4/2020

Source Shanghai Municipal Bureau of Planning and Land Resources; Savills Research

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PROJECTS DISTRICT AREATRANSACTION

AREA (SQ M)

AVERAGE TRANSACTION

PRICE(RMB PSM)

Bund House Huangpu Huangpu Riviera 1,371 173,900

Shanghai Arch Pudong Lujiazui Riviera 1,216 173,700

Lakeville V Huangpu Middle Huaihai Rd 9,365 160,600

Above the Bund Hongkou North Bund 361 157,600

Nove Mansion PudongLujiazui Riviera

476 155,200


and still exceeding supply. Meanwhile, the price index increased 1.2% QoQ, pushing prices to an average of RMB116,300 per sq m, up 5.7% YoY.

RESIDENTIAL LAND MARKETThirteen land plots with for-sale residential components were sold in Q4/2020. Ten of the plots were majority for-sale residential with a combined site area of 476,000 sq m, buildable area of 794,000 sq m and an average accommodation value (AV) of RMB35,047 per sq m. The most expensive land plots were a site in Zhongxing, Jing’an District that sold for RMB72,000 per sq m. The land was acquired by the JV of Ronsine, Poly, and China Merchants and is adjacent to Oriental One (中兴路壹号), currently selling for about RMB120,000 per sq m.

Six pure for-lease residential land plots were sold in Q4/2020 with an average AV of RMB5,592 per sq m. All plots were sold at their reserve prices.

RESIDENTIAL SALES MARKET OUTLOOKSeveral high-end projects started marketing units towards the end of 2020 and are anticipated to launch in Q1/2021. Projects including Ocean One (中粮瑞虹海景壹号) and Qingyun One (融创青云壹号) launched on January 9th, 2021. Shanghai Bay (尚海湾豪庭), Millhouse Residence (龙盛福新里) and Nove Mansion III (九庐三期) are also expected to launch later in Q1/2021. Additionally, urban renewal projects in the city core will foster a hot market in the coming years.

The land market was particularly strong in 2020. Further urban redevelopment projects in Hongkou, Yangpu and Jing’an will likely unlock several key plots. However, tighter developer financing may reduce competition for these plots as potential bidders conserve capital. Government language in the run-up to the “14th Five-year Plan” continues to reiterate mantra that “homes are for living, not speculating”. The responsibility continues to reside with local authorities to regulate the market and control price growth through distinct policy approaches.

GRAPH 3: First-Hand, High-End Apartment Market Supply, 2016 to 2020


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Tomson Riviera Pudong Lujiazui Riviera 1,364 263,400

Suhe Creek Jing’an Suhe Creek 605 234,600

Bund House Huangpu Huangpu Riviera 8,582 163,200

Lakeville V Huangpu Middle Huaihai Rd 33,752 162,100

Shanghai Aroma Garden

Huangpu Laoximen 7,816 152,800


TABLE 3: Top Five Apartment Projects By First-hand Transaction Prices, 2020

Residential Sales

TABLE 2: Top Five Apartment Projects By First-hand Transaction Prices, Q4/2020

shanghai – january 2021 market in residential sales ......shanghai +8621 6391 6688 shirley.tang@...

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