briefing residential sales july 2015...briefing shanghai residential sales july 2015 million sq m,...

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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

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

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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)

savills.com.cn/research 03


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


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

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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

04


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


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

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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

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40,000

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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.


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

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2.0

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3.0

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4.0

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2007 2008 2009 2010 2011 2012 2013 2014 2015

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B per sq m

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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

06


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.

briefing residential sales july 2015...briefing shanghai residential sales july 2015 million sq m,...

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