China Daily Global Edition (USA)
Shanghai’s property market on road to recovery
As business and life are gradually returning to normal in Shanghai, I have also discovered quite a few signs showing that the Chinese metropolis’ property market is walking out of the lockdown shadow and geared up for a recovery.
After more than two months at a literal standstill, Shanghai is seeing new residential projects being launched at an accelerated pace, and a rising volume of high-end residential properties are traded, indicating the housing market is bouncing back.
Xie Chen, head of research with CBRE China, said the residential property market has started to come back strongly in terms of both supply and demand in June.
Property developers are speeding up to release new home projects, and about 9,000 units of new residential apartments became available for trade last month. In the meantime, home transactions by floor area surged more than sevenfold, said Xie.
A total of 7,516 units of new residential apartments were traded across Shanghai in June, surging 689 percent month-on-month, but still 17 percent lower than the same period last year, according to Lianjia Shanghai statistics.
The growth is more striking in terms of value as residential properties were transacted for a combined value of 68.5 billion yuan ($10.12 billion), soaring 798 percent monthon-month and 31 percent year-onyear.
Apartments were sold at an average price of 75,380 yuan per square meter, a growth of 5 percent from the previous month, and 43 percent in comparison with a year ago.
As the sales progress was accelerated in June, many high-end transactions that had been in progress at the end of the first quarter were completed via online buying systems in the second quarter. As a result, high-end sales rebounded sharply in June, said Sheng Xiuxiu, research director for the JLL China residential sector.
A total of 1,239 high-end units were sold in the past quarter, up 15.9 percent quarter-on-quarter and 154.4 percent year-on-year, according to JLL, a global real estate service and investment management firm.
As Shanghai gets back to normal, JLL expects the housing market to regain confidence and gradually recover in the second half.
“Shanghai further loosened its residency policy for fresh graduates. This effort to attract talents with solid housing demand will support sales in the coming quarters,” said Sheng.
The recovery signs in retail business are more evident for people living and working in the city.
According to Sheng, daily subway passenger traffic in early July has restored to 8.6 million passenger trips, or about 80 percent of the prepandemic level. With 831 kilometers in total length by 2021, the city boasted the longest metro network among all cities in the world.
Likewise, foot traffic and sales revenue recovered gradually at physical stores. Since June, luxury brands have led the recovery due to strong pent-up demand and delayed purchases.
In addition, coffee and tea brands also saw a surge in orders after the resumption of delivery services. Restaurants with outdoor seating saw a quicker recovery, Sheng added.
“The whole city’s commercial activities are reviving. As dine-in services gradually resumed at Shanghai restaurants at the end of June, shopping malls in Shanghai are rapidly recovering their popularity,” said Xie.
Furthermore, more than 40 retail brands opened their first store in Shanghai from the beginning of June to early July, and more are in the pipeline in the second half along with accelerated demand, Xie said.
Regardless of the pandemic
impact, 32.8 billion yuan worth of commercial real estate investments were made in Shanghai in the first half, up 2.5 percent compared to the same period last year, and Shanghai is also the only first-tier Chinese city that reported positive growth in terms of commercial real estate investments in the first half, said global real estate services company Cushman & Wakefield.
The outstanding performance was mostly seen in investment in offices, which accounted for 64 percent of total transaction value and nearly doubled that of 2021.
Lu Qiang, executive director of capital markets in East China with Cushman & Wakefield, expects Shanghai’s commercial real estate investments to exceed 72.2 billion yuan in 2022.