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Savills Research

Residential Tianjin – October 2020

Residential market shows signs of fatigueHousing demand didn’t witness a rebound during the third quarter, resulting in decreased transaction volumes both quarterly and yearly.

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“Citywide residential market saw less demand in Q3/2020 and supply and transaction volumes both witnessed declines on a quarterly basis. However, average transaction prices remained steady as rigid demand was still the main driver.” VINCENT LI, SAVILLS RESEARCH

• The high-end serviced apartment market witnessed no new supply in core areas in Q3/2020.

• The average vacancy rate of serviced apartments moved up by 3.0 percentage points (ppts) quarter-on-quarter (QoQ) and 10.1 ppts year-on-year (YoY) to 29.5%. Average rent dipped by 0.4% QoQ to RMB227 per sq m per month, though it reflected a slight pick-up of 0.4% YoY.

• Citywide residential transaction volumes reached around 3.14 million sq m, down 10.9% QoQ and 15.6% YoY.

• Citywide first-hand residential prices inched up by 0.3% QoQ to an average of RMB16,400 per sq m, an increase of 6.1% YoY.

• Smaller apartments with lower total considerations were popular to buyers, and many residential transactions were completed in suburban areas.

• No new projects launched onto the city core’s high-end residential sales market in Q3/2020.

• The average transactional price of citywide high-end residences dropped by 3.5% QoQ and 8.4% YoY to an average of RMB41,000 per sq m.

• The “three red lines” policy specified acceptable asset liability ratios for real estate enterprises, aiming to narrow financing channels to avoid a large amount of speculative money flowing into the real estate market.

Andy CheeGeneral ManagerTianjin+8622 5830 8886andy.chee@savills.com.cn

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Savills team

James MacdonaldSenior DirectorChina+8621 6391 6688james.macdonald@savills.com.cn

Vincent LiAssociate DirectorNouthern China+8610 5925 2042vincentx.li @savills.com.cn

RESEARCH

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RESIDENTIAL LEASING MARKETThe high-end serviced apartment market witnessed no new supply in core areas, keeping total stock at 1,155 units during Q3/2020. The average vacancy rate went up 3.0 ppts QoQ and 10.1 ppts YoY to 29.5% and serviced apartment rents edged down 0.4% QoQ but edged up 0.4% YoY to an average of RMB227 per sq m per month. Since the COVID-19 pandemic has yet to be fully contained worldwide, Tianjin’s serviced apartment market was still under pressure due to the strict restrictions and quarantine policies on both inbound and domestic travellers.

RESIDENTIAL SALES MARKETCitywide first-hand commodity residence market exhibited a short-term adjustment in Q3/2020 in view of the steady new supply, though sales were still largely flat in the quarter. In the post-COVID-19 market, demand was not fully released even during the traditional peak sales season in September. Citywide residential transaction volumes reached around 3.14 million sq m, declining 10.9% QoQ and 15.6% YoY. The transaction prices of first-hand residences inched up by 0.3% QoQ to an average of RMB16,400 per sq m, an increase of 6.1% YoY.

No new projects entered the high-end residential market in Q3/2020. The average transaction prices of the citywide high-

end residences decreased by 3.5% QoQ and 8.4% YoY to RMB41,000 per sq m. Three projects that have launched in 2019, Gemdale’s Topview located in Balitai Area, Zhenro’s The Pinnacle, located on Huanghe Road, and No. 5 of Binxi Road ranked the top three, respectively, in residential sales prices.

MARKET OUTLOOKIn Q3/2020, the government tightened the financing policies of real estate industry. The confirmation of “three red lines” policy has positive significance for reducing financial risk in the real estate industry, restraining the fierce competition in the land market and maintaining the healthy development of the whole industry. Additionally, “deleveraging and reducing debt” will become the primary task for the majority developers in the rest of this year. Developers are expected to provide incentives or price reductions to accelerate absorption in Q4/2020, which will make the market even more intense.

Source Savills Research

GRAPH 1: High-end Serviced Apartment Vacancy And Rental Index, Q4/2015 to Q3/2020

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GRAPH 2: Transaction Volumes Of First-hand Commodity Residences, Q4/2015 to Q3/2020

Source Savills Research

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GRAPH 3: Transaction Prices Of First-hand Commodity Residences, Q4/2015 to Q3/2020

Source Savills Research Source Savills Research

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Residential

TABLE 1: High-end Residential Sales Market, Q3/2020

DISTRICT

AVERAGE PRICE (RMB PER SQ M) QoQ INDEXED

CHANGE (%)YoY INDEXED CHANGE (%)

Q2/2020 Q3/2020

Meijiang 41,348 43,599 5.4% 26.2%

Olympic Area 52,346 45,487 -13.1% -33.6%

Haihe Riverside 35,119 36,324 3.4% -12.8%

New Badali 39,417 38,300 -2.8% -3.1%

Other 50,062 47,660 -4.8% 5.6%