China Residential Watch 201106
Transcript of China Residential Watch 201106
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China Residential Market WatchJUNE 2011
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JUNE 2011
market Highlights
Chart 1Month-on-month change in the transacted area of primary residential property (May 2011)
Month-on-month change
-30%-40% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
Chongqing
Wuhan
Shenyang
Shanghai
Chengdu
Guangzhou
Beijing
Hangzhou
Shenzhen
Tianjin 59.8%
51.5%
42.5%
38.5%
36.1%
32.5%
30.1%
12.5%
7.6%
-30.0%
Primary home sales picked up while pricesremained stable
In May 2011, the total transacted
area of new homes in ten major
Mainland cities rebounded
signicantly month on month,
but the total area remained at a
relatively low level.
In May 2011, the total transacted area of new homes in ten major Mainland cities rebounded from
the previous month, but the total area remained at a relatively low level. Meanwhile, new home
prices, adjusted by dierences in property type, location, ttings and whether they were presale
or completed units, edged up a marginal 0.7% month on month.
In May, total primary residential transacted area in the ten cities rebounded 22.5% from April.
Aside from Chongqing (-30.0%), all of the ten major cities recorded growth, with Tianjin (59.8%)
and Shenzhen (51.5%) witnessing the largest gains. Compared with a year ago, the total
transacted area in the ten cities increased 27.4%. However, the sales gure was still relatively
low. Most of the cities saw transacted areas drop in May 2011 compared with their average
in 2010, with Chongqing (-43.6%), Tianjin (-26.1%), Chengdu (-24.4%) and Beijing (-23.8%)
experiencing the biggest declines.
Meanwhile, the rebound in new-home sales was due to increased supply and lower prices in
some of the cities. Month-on-month price drops were the sharpest in Shenzhen (-7.1%) and
Tianjin (-1.9%), while at the same time, transacted areas recorded the biggest month-on-month
gains in these two cities, reecting the inuence of price reductions in promoting primary sales.
However, in the short term, price cuts are not expected to gure prominently in developers
marketing strategies. Given that developers nancial strength has not deteriorated markedly, we
do not expect price discounts to be widely oered across the country.
However, policy risks in the property market remain high: the central government twice raised
RMB-deposit reserve rates of nancial institutions by 50 basis points, on 18 May and 20 June.
Rates have been raised six times so far this year and have now reached a historical high of 21.5%
in major nancial institutions. These increases have the eect of tightening developers credit
and adding funding pressure. They also suppress home-buying demand, with commercial banks
in some cities lifting mortgage rates and down-payment ratios for rst-home purchases.
Looking ahead, the supply of new homes in the ten major cities will continue to increase. We
expect sales volume to continue growing, but overall to remain relatively low, resulting in higher
inventory levels. Currently, it would take about 11 months for the market to absorb all available
inventory in the ten cities (assuming sales rate remains the same as the past three months
average). We believe rising inventory and funding pressure will suppress home prices from the
third quarter.
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The average price of new homesin ten major Mainland cities
taking into account diferences
in property type, location,
ttings and whether they were
presale or completed units
rose a marginal 0.7% in May,
from the previous month.
Some major Mainland cities
registered month-on-month
drops in adjusted new-home
prices in May 2011, with
Shenzhen experiencing the
largest decline (-7.1%), followed
by Tianjin (-1.9%).
Chart 2Price trend of primary residential property (in ten major cities)
2007 Jan = 100
Note: The ten major cities include Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Chongqing, Chengdu, Hangzhou, Wuhan and
Shenyang. The home prices of these cities have been adjusted to take into account differences in property type, location, fittings or
whether they were presale or completed units.
100
120
140
160
180
200
220
240
JulJan JanJulJanJulJanJulJan
2007 2008 2009 2010 2011
Month-on-month change
Chart 3Month-on-month price change in primary residential property (May 2011)
-8% -6% -4% -2% 0% 2% 4% 6% 8%
Shenzhen
Tianjin
Guangzhou
Chongqing
Beijing
Hangzhou
Chengdu
Wuhan
Shanghai
Shenyang 6.5%
2.5%
2.3%
1.4%
1.1%
0.9%
0.6%
-1.0%
-1.9%
-7.1%
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JUNE 2011
Table 4
Average per-sq-m prices of primary residential property (May 2011)
CityUrban area
(RMB per sq m)
Suburban area
(RMB per sq m)City-wide
(RMB per sq m)Month-on-month
change (%)
Beijing 31,327 14,419 21,429 3.6%
Shanghai 38,233 17,990 22,387 1.5%
Guangzhou 24,091 9,718 11,254 6.6%
Shenzhen 15,653 - 15,653 22.1%
Tianjin 19,304 8,170 10,434 5.6%
Chongqing 7,834 5,830 7,656 5.5%
Chengdu 9,541 5,865 6,887 1.6%
Hangzhou 25,904 13,575 17,573 9.4%
Wuhan 9,595 6,226 7,497 5.6%
Shenyang 6,711 5,785 6,215 9.8%
Average 19,136 9,387 12,778 0.5%
Note: The average prices are unadjusted by property attributes.
Table 5
Average unit prices of primary residential property (May 2011)
CityUrban area
(RMB million)Suburban area
(RMB million)City-wide
(RMB million)Month-on-month
change (%)
Beijing 3.45 1.24 2.03 0.5%
Shanghai 4.83 1.98 2.53 2.9%
Guangzhou 2.61 1.15 1.32 0.9%
Shenzhen 1.34 - 1.34 28.6%
Tianjin 1.71 0.82 1.02 1.3%
Chongqing 0.74 0.56 0.72 6.8%
Chengdu 0.88 0.58 0.67 1.9%
Hangzhou 2.79 1.40 1.84 15.3%
Wuhan 0.98 0.62 0.76 7.6%
Shenyang 0.55 0.54 0.54 6.4%
Average 2.07 0.94 1.29 0.8%
Note: Price per unit is generated by dividing total sales consideration by the total number of transacted units(unadjusted by property attributes).
The urban, suburban andcity-wide per-sq-m primary
residential prices were the
highest in Shanghai, followed
by Beijing.
Of all the ten major cities,
Shanghai had the highest
urban, suburban and city-wide
primary residential unit prices.
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In May 2011, Shanghai sold the
highest number of new luxury
homes valued at RMB5 million
or above (567 units), followed
by Beijing (495 units) and
Hangzhou (217 units).
Table 6
Total transacted area of primary residential property (May 2011)
CityTransacted area
(thousand sq m)Month-on-month
change (%)Year-on-yearchange (%)
Beijing 761.0 38.5% 53.7%
Shanghai 819.9 30.1% 165.5%
Guangzhou 917.3 36.1% 85.4%
Shenzhen 249.9 51.5% 134.8%
Tianjin 816.2 59.8% 18.2%
Chongqing 575.6 30.0% 62.8%
Chengdu 1,274.4 32.5% 14.9%
Hangzhou 383.4 42.5% 119.8%
Wuhan 645.6 7.6% 10.8%
Shenyang 1,043.7 12.5% 1.2%
Total 7,487.0 22.5% 27.4%
In May 2011, all ten major citiesexcept Chongqing (-30.0%)
witnessed month-on-month
growth in the transacted areas
of primary homes, with Tianjin
(59.8%) recording the largest
increase.
Table 7
Number of primary residential units sold by price range (May 2011)
CityPrice range (RMB million per unit)
< 1.0 1.0-
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In May 2011, The Manorin Shanghai was the most
expensive primary residential
project in China, priced at
RMB143,646 per sq m.
All of the ten Mainland cities,except Shenyang (-10.4%),
registered month-on-month
increases in the unsold
inventory of new homes in May
2011, with Hangzhou recording
the largest gain (18.7%).
Table 8
Total oor area of primary residential property available for sale (May 2011)
CityAvailable inventory
(million sq m)Month-on-month
change (%)Year-on-yearchange (%)
Beijing 10.2 1.8% 0.7%
Shanghai 7.3 7.7% 28.6%
Guangzhou 6.2 6.9% 46.3%
Shenzhen 4.4 5.2% 10.7%
Tianjin 8.2 10.9% 27.0%
Chongqing 4.4 14.4% 27.1%
Chengdu 9.2 6.6% 171.8%
Hangzhou 3.8 18.7% 88.5%
Wuhan 14.4 1.6% 9.7%
Shenyang 8.0 10.4% 14.6%
Total 76.2 4.3% 18.1%
Table 9
Most expensive primary residential project in each city (May 2011)
City Project DistrictTransaction volume(number of units)
Average price(RMB per sq
m)
Beijing Imperial Mansion Dongcheng 1 125,561
Shanghai The Manor Luwan 4 143,646
Guangzhou Canton View Bay Yuexiu 3 48,407
Shenzhen Triumphal Bay Longjiang 2 80,000
Tianjin No.3 Hai He Mansion Hebei 2 46,610
Chongqing Pearl on the River Jiangbei 1 24,649
Chengdu Island by the River Chengxi 2 33,825
Hangzhou Orchid Residence Xiacheng 21 53,456
Wuhan Wuhan Tiandi Jiang'an 9 32,380
Shenyang Shenyang MIXc Residence Heping 14 22,000
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The delineation of urban andsuburban districts in each
city makes inter-city price
comparison more relevant.
Chengdu
Shenzhen
Guangzhou
Hangzhou
Tianjin
Chongqing
Wuhan
Beijing
Shenyang
Shanghai
Table 10
Urban and suburban areas of ten major Chinese cities
City Urban areas Suburban areas
Beijing Dongcheng, Chaoyang, Xicheng,
Xuanwu, Fengtai, Congwen,
Haidian, Shijingshan
Fangshan, Mentougou, Tongzhou,
Shunyi, Changping, Daxing,
Huairou, Pinggu
Shanghai Huangpu, Luwan, Xuhui, Changning,
Zhabei, Yangpu, Hongkou, Pudong
New Area, Jing'an, Putuo
Baoshan, Chongming, Fengxian,
Jiading, Jinshan, Minhang, Nanhui,
Qingpu, Songjiang
Guangzhou Yuexiu, Liwan, Tianhe, Haizhu Baiyun, Songhua, Panyu, Huadu,
Huangpu, Luogang, Nansha,
Zengcheng
Shenzhen Luohu, Futian, Nanshan, Yantian,
Longjiang-
Tianjin Heping, Hedong, Hexi, Nankai,
Hebei, Hongqiao
Xiqing, Dongli, Jinnan, Beichen,
Wuqing, Baodi
Chongqing Dadukou, Jiangbei, Jiulongpo,
Nanan, Shapingba, Yubei, Yuzhong
Banan, Beibei, Changshou,
Hechuan, Jiangjin, Wanzhou
Chengdu Jinjiang, Qingyang, Jinniu, Wuhou,
Chenghua
Longquanyi, Wenjiang,
Qingbaijiang, Xindu, Shuangliu,
Pixian
Hangzhou Shangcheng, Xiacheng, Xihu,
Gongshu, Jianggan
Binjiang, Xiasha, Yuhang, Zhijiang
Development Zone
Wuhan Jiang'an, Jianghan, Qiaokou,Hanyang, Wuchang, Qingshan,
Hongshan
Dongxihu, Hannan, Caidian,Jiangxia, Xinzhou, Huangpi
Shenyang Shenhe, Heping, Huanggu, Dadong,
Tiexi New District
Sujiatun, Dongling, Shenbei New
District, Yuhong New District
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About Knight FrankKnight Frank LLP is the leading independent
global property consultancy. Headquartered
in London, Knight Frank and its New York-
based global partner, Newmark Knight Frank,
operate 209 oces in 47 countries across sixcontinents. More than 6,840 professionals
handle in excess of US$755 billion worth of
real estate annually, advising clients ranging
from individual owners and buyers to major
developers, investors and corporate tenants.
Knight Frank has a strong presence in the
Greater China property markets, with oces
in Hong Kong, Beijing, Shanghai, Guangzhou
and Macau, oering high-quality professional
advice and solutions across a comprehensive
portfolio of property services.
About HoldwaysBeijing Holdways Information & Technology
Co Ltd (hereinafter referred to as Holdways),
founded by the China National Real Estate
Development Group Corporation, was one of
the rst property information and consultancyservice providers in China.
With comprehensive property and nance
databases and strong market research and
analytical power, and staed by qualied and
experienced professionals, Holdways provides
real estate intelligence, market research,
competitor analysis and strategic consultancy
services to both domestic and international
companies.
Bringing clarity to Chinas property market
China has the worlds largest housing market, and investorsboth foreign and localhave
immense interest in this thriving sector. In 2010, an estimated 9.3 million new homes were sold
across Mainland China. The real estate sector accounted for 23.8% of Chinas RMB24.1-trillion
xed asset investments last year. Meanwhile, foreign direct investment (FDI) in Chinas real estate
sector amounted to USD24.0 billion in 2010, accounting for 22.7% of the countrys total inbound
FDI.
Despite the importance of this sector, there is much misunderstanding about Chinas property
market, due to a lack of consistent statistics. For example, inter-city price comparison is not
always worthwhile, as some cities mix the data of subsidised housing with private housing
statistics, while others do not. The fact that cities expand their boundaries and include additional
suburbs in their jurisdictions at dierent rates has made the issue even more complex.
Against this backdrop, international property consultancy Knight Frank and China-based propertyconsultancy Holdways have formed an alliance to ll the gap in accurate statistical data and bring
clarity to Chinas property market. We have access to a unique database covering the market data
of 35 Mainland cities, with the potential of expanding to 100 cities. We are committed to applying
our expertise in property research and analysis to organise and present the data in a consistent
and concise way.
This report covers the primary-market data of Chinas ten most important cities, spanning the
Bohai Rim region in the north; the Yangtze River Delta in the east; the Pearl River Delta in the
south; and the western regions. To facilitate worthwhile inter-city comparison, some data, such as
the average price of new home sales in the private market, have been reorganised to cover only
key urban areas, with the delineation of urban and suburban districts in each city clearly stated in
Table 10.
Please feel free to contact us if you require more specic information about Chinas property
market.
We have access to a uniquedatabase covering the market
data of 35 Mainland cities, with
the potential of expanding to
100 cities.
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(20115)
-30%-40% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
qing
han
ang
ghai
gdu
hou
ijing
hou
hen
njin 59.8%
51.5%
42.5%
38.5%
36.1%
32.5%
30.1%
12.5%
7.6%
-30.0%
/
0.7
22.5(-30.0)
59.851.5
27.4
(-43.6)-26.1-24.4
-23.8
(-7. 1)
(-1. 9)
:
0. 50. 5
21.5
(
)
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10
/
0.7
(-7.1)
(-1.9)
(20115)
-8% -6% -4% -2% 0% 2% 4% 6% 8%
zhen
ianjin
zhou
gqing
eijing
zhou
ngdu
uhan
nghai
yang 6.5%
2.5%
2.3%
1.4%
1.1%
0.9%
0.6%
-1.0%
-1.9%
-7.1%
=100
/
100
120
140
160
180
200
220
240
71 1717171
2007 2008 2009 2010 2011
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(20115)
(/)
(/)
(/)
31,327 14,419 21,429 3.6%
38,233 17,990 22,387 1.5%
24,091 9,718 11,254 6.6%
15,653 - 15,653 22.1%
19,304 8,170 10,434 5.6%
7,834 5,830 7,656 5.5%
9,541 5,865 6,887 1.6%
25,904 13,575 17,573 9.4%
9,595 6,226 7,497 5.6%
6,711 5,785 6,215 9.8%
19,136 9,387 12,778 0.5%
(20115)
()
()
()
344.8 124.3 203.0 0.5%
482.5 198.0 253.4 2.9%
261.0 115.4 132.3 0.9%
133.5 0.0 133.5 28.6%
171.0 81.8 101.7 1.3%
73.6 55.6 72.1 6.8%
88.0 58.0 66.8 1.9%
278.8 140.0 183.7 15.3%
98.2 62.4 75.7 7.6%
54.5 53.6 54.0 6.4%
206.6 93.9 128.9 0.8%
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(20115)
76.1 38.5% 53.7%
82.0 30.1% 165.5%
91.7 36.1% 85.4%
25.0 51.5% 134.8%
81.6 59.8% 18.2%
57.6 30.0% 62.8%
127.4 32.5% 14.9%
38.3 42.5% 119.8%
64.6 7.6% 10.8%
104.4 12.5% 1.2%
748.7 22.5% 27.4%
-30.0
59.8
567
49521 7
(20115)
< 1.0 1.0-
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(20115)
()
1,023.9 1.8% 0.7%
732.2 7.7% 28.6%
617.7 6.9% 46.3%
442.2 5.2% 10.7%
816.9 10.9% 27.0%
444.9 14.4% 27.1%
922.7 6.6% 171.8%
382.6 18.7% 88.5%
1,435.5 1.6% 9.7%
803.1 10.4% 14.6%
7,621.8 4.3% 18.1%
(- 10.4)
18.7
143,646
(20115)
/
1 125,561
4 143,646
3 48,407
2 80,000
3 2 46,610
1 24,649
2 33,825
21 53,456
9 32,380
14 22,000
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Newmark
Knight Frank47
2096,840
7,550
93024.1
23.8
239.922.7
35100
()
35
100
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Assistant Editor-in-Chief
Jason HuDirector, Research Services
Holdways
+86 10 5128 4009 Ext 805
Helen LiuDirector and General Manager
Holdways
+86 10 5128 4009 Ext 812
Contacts
Editor-in-Chief
Thomas Lam
Director, Head of Research, Greater China
Knight Frank
+852 2846 4819
Holdways oce
Unit 1308, Tower C, Webok Times-Center, 17 South Zhongguancun Street, Haidian District, Beijing 100081, PRC
17C1308100081T +86 10 5128 4009 F +86 10 8857 2885 Holdways.com
Knight Frank oce
Suite 302, Tower E1, Oriental Plaza, No 1 East Chang An Avenue, Dong Cheng District, Beijing 100738, PRC
1302100738T +86 10 8518 5758 F +86 10 8518 5755 KnightFrank.com.cn
Jacky Wei Senior Manager, Research &
Consultancy, Beijing
Knight Frank
+86 10 8518 5758 Ext 816
This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted byKnight Frank or Holdways for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the views of Knight Frank or Holdways in relation to particular properties orprojects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank and Holdways. Knight Frank 2010
Knight Frank and Holdways offices