Briefing Residential sales May 2015

Transcription

1 Savills World Research Shanghai Briefing Residential sales May 15 SUMMARY Image: Joffre Classic, Changning New policies supported buyer sentiment, leading to Shanghai s residential sales market picking up momentum after the Spring Festival holiday. New commodity residential supply fell 53.3% in /15 to 1.8 million sq m. First-hand commodity residential transaction volumes fell % in /15, totalling. million sq m, primarily as a result of seasonal fluctuation. Transaction prices remained firm in the first quarter, averaging RMB8,5 per sq m. First-hand, high-end apartment supply fell 1.% quarter-on-quarter (QoQ) to,5 sq m, with only one new high-end project and one new phase of an existing project launched onto the market. First-hand, high-end apartment transaction volumes fell 7.% QoQ to 158, sq m. First-hand, high-end apartment transaction prices continued to see a moderate increase of 1.9% on an index basis in /15, to an average of RMB,1 per sq m. Eleven residential land plots were transacted in /15, totalling 918,9 sq m of buildable area, compared to 3.7 million sq m in /1. Average premium over the reserve price fell to.%. Average accommodation values (AV) reached RMB1,8 per sq m in /15. Short-term market prospects have improved as the government is taking steps to support the market. Further supportive policies are expected to be announced, such as an interest rate cut and tax reductions. Developers continue to focus on leading cities in terms of new land acquisitions due to their mature markets, steady end-use demand and business environments. James Macdonald, Savills Research savills.com.cn/research 1

2 Briefing Shanghai residential sales May 15 GRAPH 1 Base lending rate 8.% 7.5% 7.%.5%.% 5.5% 5.% Source: People's Bank of China, Savills Research Market overview Although China residential sales volumes roared back to life at the end of 1, the market proved quiet again at the beginning of 15, primarily due to seasonal factors. The central government sent clear supportive signals during the NPC & CPPCC (annual plenary session of the National People's Congress mth to 1 yr more than 5 yr GRAPH First-hand commodity residential market supply, transactions and prices / /15 million sq m Supply (LHS) Transaction volume (LHS) Average transaction price (RHS) TABLE 1 The history of business tax in China 35, 3, 5,, 15, 1, 5, RMB per sq m and the National Committee of the Chinese People's Political Consultative Conference) in March 15, a stark contrast to the cautious tones seen in 1. The central government announced a reduction in down payment requirements and a shortening of the applicable period of business tax from five to two years a measure commonly referred to as the 33 policy as it was announced on March 3. Additionally, many local governments announced relaxations in housing provident fund (HPF) policies while Shanghai began offering more HPF mortgages on 15 April, benefiting first time buyers and upgraders. Shanghai new commodity residential supply fell 53% in /15, to 1.8 million sq m, down 3% year-on-year (YoY). Transaction volumes dropped % QoQ to. million sq m, while transaction prices stayed firm with a slight decrease of.% QoQ, averaging RMB8,5 per sq m in the first quarter. Policies PBoC cut interest rates by 5 bps in Feb 15 The People s Bank of China (PBoC) cut interest rates in February 15, only three months after the last revision in November 1. The one-year lending rate and deposit rate both fell 5 basis points (bps) to 5.35% and.5% respectively, while the five-year benchmark lending rate was reduced from.15% to 5.9%. The reduction in rates is primarily to support the overall economy but has already, along with other policies, had a big impact in the real estate market, renewing homebuyer enthusiasm and giving developers a bit more breathing room. The new interest rate came into effect on 1 March 15. China lowered down payment and loosened tax policies The PBoC, the Ministry of Housing and Urban-Rural Development (MOHURD) and the China Banking Regulatory Commission (CBRC) jointly announced further supportive measures for the property market on March 3, commonly referred to as the 33 policy. Down payment requirements Down payment requirements for second-home buyers were reduced to a minimum of %, including those who have not fully repaid their first mortgage, down from the previous requirement for a -7% down payment (depending on the city, with tier-one cities all at 7%). Down payment requirements for first-home buyers were also reduced to a minimum of % if using a housing provident fund. Buyers that already own a property but have no outstanding mortgage can also apply for use of the housing provident fund, with a minimum down payment requirement of 3%. Business tax The holding period at which higher rates are applicable was shortened from five years to two years. Under the new regime, if ordinary housing is held for more than two years it will be exempt from business tax, while non-ordinary (luxury) housing will be charged based upon the Issued year Effective date Jun-5 Jun- Jan-9 Jan-1 Jan-11 Mar-15 Exemption period (X years) Ordinary House Non-Ordinary House X yrs TV TV CG CG TV TV X yrs Exempted Exempted Exempted Exempted Exempted Exempted - X yrs TV TV TV TV TV TV X yrs CG CG CG CG CG CG Source: Ministry of Finance of the People's Republic of China TV = Full tax required based on total values CG = Tax required based on the capital gain between selling price and purchasing cost

3 Briefing Shanghai residential sales May 15 capital gain. If the property is held for less than two years, irrespective of whether it is ordinary or non-ordinary, a business tax will be applied to the full value of the property at the time of sale. Shanghai offered more HPF mortgages to homebuyers In response to the central government s call on making full use of HPF to help low- and middleincome residents improve their housing conditions, Shanghai raised the maximum limit for HPF loans in April 15. From 15 April, an individual in Shanghai can borrow as much as RMB5, from the HPF to buy a first home or second ordinary house, while a family with more than two people contributing to the HPF can borrow up to RMB1 million. Overall commodity 1 residential market Due to seasonal factors, the firsthand commodity residential market recorded a fall in both demand and supply in the first quarter. New supply decreased by 53.5% QoQ to 1.8 million sq m and transaction volumes dropped by % QoQ, totalling. million sq m in /15, reversing the continuous oversupply situation which had been in effect since the beginning of 1. 1 Commodity housing excludes residential properties designated for relocated residents under urban redevelopment plans, as well as economical housing. First-hand transaction prices remained stable, averaging RMB8,5 per sq m in /15, down.% QoQ but up 1.8% YoY. Unsold first-hand residential inventory witnessed consecutive decreases in the first three months of 15, reaching 1. million sq m with nearly 8,9 new units on the sales market at the end of /15, thereby ending the growth trend which began in early 13. Second-hand residential transaction volumes decreased by 13.5% QoQ totalling 3.7 million sq m in /15, while average transaction prices hit a new record of RMB3, per sq m, up 1.% QoQ and 1.5% YoY. Second-hand residential (including both commodity and economical housing) listings have recorded a fall in total area since 1, totalling 7.7 million sq m of 77,3 units at the end of /15. Due to the popularity among parents, housing prices in school districts remained at high levels. Following the Jing an district government, more districts (including Hongkou, Zhabei and Baoshan) brought into effect the policy of limiting the use of one house to enrol children from more than one family within a five-year period, which is expected to reduce second-hand housing turnover rates. With these new restrictions in place, TABLE Shanghai HPF mortgage maximum limit, before & after policy GRAPH 3 First-hand market inventory 3 and digestion period, Jan 8 Mar 15 million sq m Unsold inventory (LHS) Jan-8 Jan-9 Jan-1 Jan-11 Jan-1 Jan-13 Jan-1 Jan-15 3 Includes both commodity and economical housing. Digestion period (RHS) GRAPH Second-hand residential sales market transactions and prices, /7 /15 million sq m Core district transaction volume (LHS) Fringe district transaction volume (LHS) Core district price (RHS) Fringe district price (RHS) Core 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 Non-core district transaction volume (LHS) Overall average price (RHS) Non-core district price (RHS), 35, 3, 5,, 15, 1, 5, 8 months RMB per sq m First home / second ordinary home buyers (RMB million) Second non-ordinary home buyers (RMB million) Before After Source: Shanghai Provident Fund Management Centre Individual Family (> people) Individual Family (> people) HPF loan cap.3... Extra HPF loan cap Total HPF loan cap Extra HPF loan cap Total TABLE 3 First-hand commodity residential market by property type, /15 Supply Transactions Average price Price index sq m QoQ (%) sq m QoQ (%) RMB per sq m QoQ (%) (Dec 1 = 1) QoQ (%) Apartment 1,518, ,718, -.5 8, Villa 315,5-15.5, , Overall 1,833, ,959,1 -. 8, Source: Shanghai Real Estate Transaction Centre, National Bureau of Statistics, Savills Research This price index is based on 7 main city house indices published by NBS. savills.com.cn/research 3

4 Briefing Shanghai residential sales May 15 GRAPH 5 First-hand high-end apartment market 5 supply, /5 /15 sq m, 5,, 3,, 1, Primary area Secondary area Emerging area potential home buyers with children may look at districts which don t have these policies in place as yet. High-end residential sales market First-hand, high-end apartment supply was relatively limited in the first quarter. Only one new project, Joffre Classic, was launched, bringing 37 new units onto the sales market, while the rest of the supply was a new phase (1 units) of an existing project, Oriental Bay in the Xuhui district. Zhabei district. 3 apartment units were launched in April 15, adding 38,7 sq m to the sales market. Major unit types and sizes include 95 sq m (three bedrooms), 158 sq m (three bedrooms) and 19 sq m (four bedrooms). A high sales rate of over 7% was reported to have been reached on the launch day, with sales values totalling RMB.1 billion. Project focus Joffre Classic ( 淮海名邸 ) /5 / /7 /8 /9 /1 /11 /1 /13 /1 /15 5 Primary: 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). GRAPH First-hand high-end apartment market transactions and prices, /5 /15 Primary area transaction volume (LHS) Emerging area transaction volume (LHS) Secondary area price index (RHS) 35, 3, 5, Secondary area transaction volume (LHS) Primary area price index (RHS) Emerging area price index (RHS) New high-end apartment transaction volumes recorded a drop of 7.% QoQ to 158, sq m, as a result of the high base in /1 and limited new launches in the first quarter. Transaction prices continued a moderate growth of 1.9% QoQ on an index basis to an average of RMB,1 per sq m by the end of /15. Shanghai s high-end residential market has recently witnessed outstanding sales performance in new launches. Developed by Franshion Properties, Daning Jinmao Palace is a new, high-end apartment project located in the Located north of the Red Town Art Zone ( 红坊创意园区 ) on Xinhua Road in the Changning district, Joffre Classic is a new, high-end apartment complex developed by BM Holding. The project enjoys easy access to the Hongqiao Road Station (Metro Lines 3,, 1) and is within five minutes drive of the Inner Ring Road and the Yan an Elevated Road. sq m, 15, 15 TABLE Second-hand residential market by property type, /15 1, 5, GRAPH 7 Second-hand, high-end apartment market transactions and price index, / /15 sq m 1, 1, 8,,,, Transaction volume (LHS) Price index (RHS) Based upon a basket of high-end apartment projects / = 1 Transactions Average transaction price sq m QoQ (%) RMB per sq m QoQ (%) Apartment 3,57,3-13.9, Villa 181,7-5.9, Overall 3,79, , +1. Source: Shanghai Real Estate Transaction Center, Savills Research TABLE 5 Top five bankuai/areas by first-hand apartment transaction prices, /15 vs /1 /15 /1 Bankuai District Average transaction price (RMB per sq m) Huaihai Road (M) Huangpu 15, Lujiazui Riverside Pudong 15, Nanjing Road (W) Jing'an 93,5 Xinhua Road Changning 8,7 Huangpu Riverside Huangpu 85, Lujiazui Riverside Pudong 18,3 Huaihai Road (M) Huangpu 1,5 Nanjing Road (W) Jing'an 97,3 Huangpu Riverside Huangpu 8, Longhua Xuhui 75,

5 Briefing Shanghai residential sales May 15 Covering a site area of 5,77 sq m, Joffre Classic has a relatively low plot ratio of only 1.9 and conforms to the overall architectural style in the area. The project comprises nine, multistorey residential buildings, totalling 1 units. The project launched 37 apartment units (Phases 3 and ) in /15, adding nearly 1,5 sq m onto the sales market. Phases 3 and consist of one eight-storey and two seven-storey towers with major unit sizes ranging from 37 sq m (3 bedroom) to 88 sq m ( bedroom). Current asking prices start from RMB1, per sq m. Fully-fitted units are expected to be handed over in /1. Phases 1 and are now under planning. As the area matures, many new highend developments have been built, while the preservation of parts of the former French Concession has meant that new development projects have been limited. High-end residential sales projects such as 1 Xinhua Road and Central Residence have sold out, with second-hand transaction prices now reaching RMB7, to RMB9, per sq m. Second-hand, high-end apartment transaction volumes decreased by 1.9% QoQ while transaction prices saw a moderate increase of % QoQ on an index basis, averaging over RMB59,7 per sq m in /15. Residential land market The Shanghai residential land market proved quiet in the first quarter of the year, with both sales volumes and values recording QoQ and YoY falls. Eleven residential land plots were transacted in /15, totalling 918,9 sq m of buildable area, down 75% from 3.7 million sq m in /1. Meanwhile, land sales values plunged 75.3% QoQ, totalling RMB13. billion in the first quarter. Despite low transaction volumes, the AV remained at a high level, averaging RMB1,8 per sq m in /15. Average premium over the reserve price in the first quarter reached.%, a drop of 1.1 percentage points (ppts) QoQ. The Shanghai residential land market witnessed a new AV record in April 15 outside of the Outer Ring Road. Two pure commodity residential land plots in Tangzhen, 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-3-5a has a site area of 1, sq m and a plot ratio of 1.7, with an AV of RMB7,9 per sq m. Plot D--7 has a site area of 5, sq m and a plot ratio of 1., GRAPH 8 Residential land transaction area (buildable area) and AV, /7 /15 Source: Shanghai Municipal Bureau of Planning and Land Resources; Savills Research TABLE High-end apartment supply, /15 Project Joffre Classic 淮海名邸 Oriental Bay Jinyuan 云锦东方 锦园 Launch date Area Developer District Transaction price (RMB per sq m) GFA (sq m) Total no. of units Average unit size (sq m) No. of units sold Mar Primary BM Holding Changning 9, 1, Mar Secondary Donghang Real Estate Xuhui 9, (asking price) 5, 1 5 -* * No transactions registered in the SRETC system as of /15. TABLE 7 Top residential land deals by AV, /15 vs /1 /15 Date District Site area (sq m) GFA (sq m) Plot ratio Transacted price (RMB million) Transacted price (RMB million) Premium (%) AV (RMB per sq m) Mar Zhabei 7,315,3.7,7 7,5 1. 3,871 Feb Minhang,1 9, , ,777 Feb Pudong 19,9 9, ,951 Quarter ,87 918, ,98 13,58. 1,78 Dec Pudong 13,95 7, , ,9 /1 Dec Pudong 1,58, , ,83 Dec Pudong 11,95, , ,95 Quarter - - 1,59,57 3,73,938.,37 5, ,953 Source: Shanghai Municipal Bureau of Planning and Land Resources, Savills Research 5

6 Briefing Shanghai residential sales May 15 with an AV of RMB9,7 per sq m. Surrounding residential projects are selling for RMB-5, per sq m. Residential sales market outlook A shift by the government to a generally more supportive stance has improved market sentiment and will likely encourage transactions. However, developers are likely to remain aggressive in asset turnover, looking to pay down debt and become more asset light. With transaction volumes on the rise and lower borrowing costs, Shanghai s residential transaction prices are expected to stay firm in 15, while prices in some areas are expected to see moderate growth due to new high-end projects and expensive land transactions. The second quarter of 15 is expected to see more high-end apartment supply. In addition to the new launch of Daning Jinmao Palace, which launched 3 units in April, Fuxing Royale, a new residential project located in Laoximen, in the Huangpu district, is expected to launch in /15. Bund House in Huangpu Riverside may release its new launch in May 15, with the top-floor unit said to be priced at RMB38, per sq m. The Shanghai residential land market is likely to see competition for new land plots remain fierce for the rest of 15. Residential property in Shanghai is still regarded as an important way to retain wealth value, especially by domestic high-net-worth individuals. As the Shanghai Composite Index rose 38.% in /15, reaching almost,5 by the end of April, and analysts start talking about a bubble, some long-term investors may reenter the housing market to secure stock gains. As a result, market growth looks set to improve over the course of 15. Please contact us for further information Savills Research Savills Residential Sales James Macdonald Director, China james.macdonald@savills.com.cn Siu Wing Chu Deputy Managing Director siuwing.chu@savills.com.cn Shirley Tang Director shirley.tang@savills.com.cn Michelle Zhou Associate Director michelle.zhou@savills.com.cn 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 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.