Savills World Research Shanghai Briefing Residential sales May 18 SUMMARY Image: Fuxing Royale, Huangpu District The market is eagerly anticipating a rush of presale permits in April as the conditions stabilise and the standoff between the government and developers begins to thaw. New commodity residential supply rebounded by 15.9% quarter-on-quarter (QoQ) in /18 to 7, sq m, but remained down.9% year-on-year (YoY). First-hand commodity residential transaction volumes increased by 1.%, totalling 1., down.1% YoY. Average transaction prices fell by 9.% QoQ to RMB, per sq m, down.8% YoY. The first-hand high-end apartment market has received no new supply for three consecutive quarters. First-hand high-end apartment market recorded a decline in transaction volumes, falling 5.% from the previous quarter to, sq m in /18, down 59.1% YoY. First-hand high-end apartment transaction prices grew.% in /18 to an average of RMB1,5 per sq m. No pure for-sale residential land plots were transacted in /18. First time buyer mortgage rates in Shanghai increased to 5.11% in March 18 from.1% a year earlier. Volumes remained close to alltime lows in the first quarter with buyers continuing their wait for new products at what is expected to be a discount to market. Prices of existing stock remained stable with only a limited number of developments vying for buyers attention. James Macdonald, Savills Research savills.com.cn/research 1
Briefing Shanghai residential sales May 18 Market overview New commodity residential supply and transaction volumes continued to hover at historically low levels, partly due to the Chinese New Year period. New commodity apartment average transaction prices fell, while secondhand prices climbed to new heights. This convergence in average prices narrowed the price gap between first and second-hand markets to only RMB, per sq m in /18, the smallest gap seen in the past six years. Unsold inventory levels continued to fall to historically low levels, totaling., as transaction volumes outstripped supply for the seventh consecutive quarter. Shanghai s newly-added housing development loans increased RMB billion in /18, the highest jump seen in recent years, while added mortgage loans remained at low levels. Overall commodity 1 residential market First-hand market New commodity residential supply rebounded by 1% QoQ in /18 to 7, sq m, but remained down.9% YoY. First-hand commodity residential transaction volumes increased by 1.%, totalling 1., but down.1% YoY. Average mortgage rates in Shanghai rose to 5.11% in March, according to Rong, an online financial services 1 Commodity housing excludes residential properties designated for relocated residents under urban redevelopment plans, as well as economical housing. GRAPH 1 Shanghai newly added individuals mortgage loans, /1 /18 RMb billion 1 1 8 1 15 1 17 18 GRAPH First-hand commodity residential market supply, transaction volume and prices, /8 /18 5 1 Supply (LHS) Transaction volume (LHS) Average transaction price (RHS) 8 9 1 11 1 1 1 15 1 17 18 5,,,, 1, TABLE 1 First-hand commodity residential market by property type, /18 Supply Transactions Average price sq m QoQ (%) sq m QoQ (%) RMB psm QoQ (%) Apartment 57,95 11.% 1,,9 9.%,5 (1.1%) Villa 9,757 9.% 1,1 (1.5%) 5,7 5.7% Overall 7,85 15.9% 1,19,1 1.%,171 (9.%)
Briefing Shanghai residential sales May 18 company. However, Shanghai once again has some of the lowest rates in the country compared to the national average of 5.51%. All of the regions delineated by Shanghai s ring roads recorded decreases in transaction volumes QoQ, except for the region outside the suburban ring road, which thanks to increased activity, boosted the overall transaction volume for the city higher than /17. Overall, 8% of transactions were located outside the middle ring road. Volume inside the inner ring road continued to fall due to very limited supply, down 55% QoQ, while prices fell.5% to RMB15, per sq m. Meanwhile, prices between the inner and outer ring roads reached new highs. Average transaction prices fell by 9.% QoQ to RMB, per sq m, down.8% YoY. This decline was largely a result of the make-up of transactions, which this quarter were heavily skewed towards the less expensive suburban regions of the city. Second-hand market Similar to the first-hand market, second-hand residential transaction volumes continued to remain at low levels of just.8, Includes both commodity and economical housing. up 5.8% in /18. Nevertheless, transaction prices increased 1.% QoQ to a new high of RMB,1 per sq m, partly due to buyers shifting their attention away from the first-hand market, which remains significantly understocked and undersupplied. Demand for high-end product currently found in the second-hand market could shift to the first-hand market as new stock becomes available in the coming quarters. High-end residential sales market No new supply has been seen in the first-hand, high-end apartment market for three consecutive quarters. The first-hand, high-end apartment market recorded a decline in transaction volume, falling 5.% in /18 to, sq m, down 59.1% YoY. First-hand, high-end apartment transaction prices grew by.% in /18 to an average of RMB1,5 per sq m. Average transaction prices have proven relatively unstable given the record low transaction volumes (only Judged by comprehensive criteria including location, building quality, total volumes, unit size, transaction price and property management. GRAPH Ring road regions transaction volume and prices, /1 /18 5 1 Inside Inner Ring Rd. Between Middle and Outer Ring Rd. Outside Suburban Ring Rd. Between Inner and Middle Ring Rd. Between Outer and Suburban Ring Rd. Mar-1 Jun-1 Sep-1 Dec-1 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 1, 1, 8,,,, GRAPH Second-hand residential sales market transactions and prices, /8 /18 1 1 8 Transaction volume (LHS) Average transaction price (RHS) 8 9 1 11 1 1 1 15 1 17 18, 5, 8, 1, 1, 7, GRAPH 5 First-hand, high-end apartment market* supply, / /18 sq m, 5,,,, 1, Primary area Secondary area Emerging area /8 /9 /1 /11 /1 /1 /1 /15 /1 /17 /18 *Primary: Well-established luxury residential enclaves within the inner ring road (Middle Huaihai Road, Lujiazui Riverside, Xinhua Road, Century Park,etc.). Secondary: Developing high-end residential enclaves within the middle ring road (Suhe Creek, Dapuqiao, Gubei, Xuhui Riverside,Yangpu Riverside,Qiantan,etc). Emerging: Emerging high-end residential enclaves outside the middle ring road (Xinjiangwan Town, Sanlin, Waigaoqiao etc.). units sold in /18). However, the price index in secondary residential areas continued to grow as the sector also had the majority of unsold stock and recorded 8% of transactions. Residential land market No pure for-sale residential land plots were transacted in /18. The first auction of a pure for-sale residential land plot in 18 occurred on 1 April. The plot is located near Wanda Plaza Baoshan and sold at the reserve accommodation value (AV) of RMB,19 per sq m. Ten for-lease land plots were sold in /18. Three of those plots were bought by private enterprises. This represents the first time a private enterprise has bought for-lease residential land in Shanghai. savills.com.cn/research
Briefing Shanghai residential sales May 18 For-lease residential land supply totalled 5, sq m of buildable area with an AV of RMB5, per sq m, down.5% QoQ. All plots were sold at their reserve pricing. Residential sales market outlook Supply of new high end stock is expected to increase in the remainder of 18 as many developers of existing projects are liable to obtain pre-sales licences after extended talks with the government. A number of the high-end apartments, especially those in core locations, were heavily oversubscribed. Buyers were not only attracted by the release of new stock after such a long dry spell but also by the attractive pricing offered by the developers and the general scarceness of new build developments in well-situated locations. Shui On obtained presale permits for the latest batch of its fourth phase, two and half years after its previous batch was launched. As the only new project in Xintiandi area, the project was one of the most highly sought after developments and is quoting one of the highest sq m prices in Puxi and unit prices start from RMB million. Jing an Prime Land s second batch and Jinmao Palace Ph obtained presale prices similar to earlier phases while Phili Regency secured lower asking prices than an earlier phase after having waited for two and a half years. Even Xinjiangwan Garden City, which is located outside the middle ring GRAPH First-hand, high-end apartment market transaction volumes and prices, /8 /18 sq m Primary area transaction volume (LHS) Emerging area transaction volume (LHS) Secondary area price index (RHS), 5,, 5,, 15, 1, 5, Secondary area transaction volume (LHS) Primary area price index (RHS) Emerging area price index (RHS) 8 9 1 11 1 1 1 15 1 17 18 GRAPH 7 Residential land transaction area (buildable area) and AV, /8 /18 5..5..5..5. 1.5 1..5. Land transaction GFA (LHS) Accommodation value (RHS) 8 9 1 11 1 1 1 15 1 17 18 Source: Shanghai Municipal Bureau of Planning and Land Resources; Savills Research 1 15 1 1 1 11 1 9 8,,, 8,,, 1, 1, 8,, / 1 = 1 TABLE Top five apartment projects by first-hand transaction prices, /18 Project District Area Transaction area (sq m) Average transaction price (RMB psm) Tomson Riviera Pudong Lujiazui Riverside 595,985 Above the Bund Hongkou North Bund 1,19 Suhe Creek Zhabei Suhe Creek 7 19, One Park Minhang Jinhongqiao 7,9 15,1 Chateau Pinnacle Changning Xinhua Road 1 1,9
Briefing Shanghai residential sales May 18 road, was oversubscribed. Cinda originally acquired the 18,5 sq m plot of land in 15 for RMB7. billion or RMB9,15 per sq m an 8% premium over the reserve price, the units were listed at between RMB8,87 and 18,91 per sq m. Qiantan Ocean One with its sister project Ocean One in Lujiazui launched 7 units with average pricing at a discount of roughly RMB1, per sq m to surrounding projects. This very attractive pricing attracted a number of buyers with units more than eight times oversubscribed. Around projects located inside the ring road are expected to obtain their presale permits in 18, with the majority of these located in Pudong, Yangpu, Huangpu and Jing an districts. The combined launches could total up to 1.5 and close to, units. The remainder of the city could see an additional 1 developments launched, bringing the total to 15 projects, compared to 1 projects last year. While the market is likely to be much more active this year given the new supply expected during the remainder of the year, a further tightening of credit availability and increasing cost of debt could put off certain buyers, which could suppress transaction volumes. TABLE Projects* opened in April 18 Project (EN) Project (CN) District GFA (sq m) Number of units Date List price lowest / highest () Jing an Prime Land 静安华邸 Zhabei,78 19 Apr 79,5/9,5 Lakeville Luxe 翠湖天地隽荟都 Luwan, 118 Apr 1 15,/19,8 Xinjiangwan Shanghai Garden 信达泰禾上海院子 Yangpu,585 7 Apr 17 8,87/18,91 Baohua City Star 宝华城市星苑 Putuo, 9 Apr 19 88,8/15,189 Phili Regency 翡丽雅苑 Yangpu,1 1 Apr 8,7/11, Jinmao Palace 金茂雅苑 Zhabei,9 8 Apr 1 85,51/11,71 Qiantan Ocean One 前滩海景壹号 Pudong 1,9 7 Apr 7,89/97,79 Dynasty on the Bund 新世界花园 Luwan 57,959 5 Apr 9,718/15, * At the time of writing, the projects had received presale permits. All projects have prices over RMB7, per sq m. Please contact us for further information Research Central Management Agency James Macdonald Senior Director China +81 91 88 james.macdonald@savills.com.cn Siu Wing Chu Managing Director Central China +81 91 88 siuwing.chu@savills.com.cn Shirley Tang Senior Director Shanghai +81 91 88 shirley.tang@savills.com.cn Michelle Zhou Director China +81 91 88 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. savills.com.cn/research 5