Top-end Bei­jing apart­ments face down­ward pres­sure

China Daily (Canada) - - FRONT PAGE - Huyuanyuan@chi­nadaily.com.cn

Se­ri­ous com­pe­ti­tion is set to weigh on the cap­i­tal value of Bei­jing’s high-end res­i­den­tial sec­tor, in­dus­try ex­perts say.

Although the loos­en­ing pol­icy en­vi­ron­ment is ex­pected to re­lease some pent-up de­mand, high prices are ex­pected to de­press sales, ac­cord­ing to a re­port from in­ter­na­tional real-es­tate ser­vices provider JLL.

“Many new projects are ex­pected to en­ter the mar­ket this year. There­fore, cap­i­tal val­ues will still face head­winds in the com­ing months,” said Eric Hirsch, head of mar­kets for JLL North China.

Sup­ply in Bei­jing’s high­end prop­erty sec­tor is ex­pected to in­crease sig­nif­i­cantly, as four new high-end apart­ment projects, com­bined with five new high-end villa de­vel­op­ments, are sched­uled to en­ter the sales mar­ket this year, with most projects post­ing prices of more than 100,000 yuan ($16,112) per sq m, ac­cord­ing to statis­tics from Sav­ills, an­other in­ter­na­tional real-es­tate ser­vices com­pany.

Both the mass mar­ket and high-end mar­ket recorded very weak sales, prop­erty agents said. The mass­mar­ket sales vol­ume fell by 30 per­cent in the first two months of this year from the pre­vi­ous quar­ter, due to limited new sup­ply and the slower Spring Fes­ti­val hol­i­day pe­riod, JLL said.

The sit­u­a­tion of the high­end mar­ket was sim­i­lar, with just 214 apart­ments and 37 high- end vil­las chang­ing hands dur­ing the same pe­riod.

How­ever, sales in both mar­kets are ex­pected to be lifted by the loos­en­ing of credit and fa­vor­able poli­cies sup­port­ing the hous­ing mar­ket.

Cap­i­tal val­ues de­clined slightly due to the low trans­ac­tion vol­ume. Pri­mary val­ues for luxury apart­ments and high-end vil­las fell by 0.4 per­cent in the first two months of the year from the pre­vi­ous quar­ter, and 4.6 per­cent from a year ear­lier, JLL said. Slower sales prompted some de­vel­op­ers to cut prices.

Fig­ures from Sav­ills show a sim­i­lar trend. High-end villa mar­ket trans­ac­tion vol­umes fell to 196 units, down al­most 50 per­cent from the pre­vi­ous quar­ter. Prices slipped by about 5 per­cent to an av­er­age of 50,100 yuan per sq m by the end of the first quar­ter of this year — up 6.9 per­cent year-on-year, Sav­ills said.

“The home pur­chase re­straint will re­main in Bei­jing, thus weigh­ing down av­er­age prices in the high­end res­i­den­tial sec­tor,” said Dong Yue, se­nior manager with Sav­ills’ re­search depart­ment.

The launch of the Asian In­fra­struc­ture In­vest­ment Bank (AIIB) and “One Belt, One Road” ini­tia­tive will pro­mote ren­minbi in­ter­na­tion­al­iza­tion and thus strengthen the pur­chas­ing power of Chi­nese peo­ple in other coun­tries.

Against this back­drop, “in­vest­ing in over­seas prop­er­ties is with­out doubt a wise de­ci­sion”, said Zhang Hong, head of In­ter­na­tional Res­i­den­tial of JLL Bei­jing.

Chi­nese main­land out­bound in­vest­ments in the global real es­tate mar­ket amounted to 16.5 bil­lion yuan last year, up 46 per­cent from 2013, JLL said.

Chi­nese main­land in­di­vid­ual in­vest­ments in over­seas prop­erty mar­kets in the first half of last year to­taled $5 bil­lion — much higher than in 2011 and 2012.

PRO­VIDED TO CHINA DAILY

High prices are ex­pected to de­press sales of Bei­jing’s top-end res­i­den­tial sec­tor. Slower sales have prompted some de­vel­op­ers to cut prices.

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