Price cuts, the last weapon for Chinese
In Beijing, the average price of an
apartment in August is 13,584 yuan (S$2,830) per square metre, higher than
the average income of local residents for the first six months of 2008 -
12,547 yuan, according to the National Bureau of Statistics.
Vanke, China's biggest listed developer,
took the lead and slashed prices by up to 27 per cent since late August in a
handful of big cities, including Shenzhen, Shanghai, Hangzhou, Nanjing and
Beijing. Many peers, such as Shenzhen- based Gemdale Corp, have followed
An index of the largest mainland
developers quoted in Hong Kong has tumbled 44 per cent so far this year.
Vanke is down almost 80 per cent since peaking last November, while Gemdale
has plunged more than 85 per cent.
'Most developers expect the market to
remain sluggish for another year or longer,' Deutsche Bank economist Jun Ma
said in a note to clients after a trip around China this month.
In their heightened anxiety, property
executives are clamouring for the government to relax its restrictions on
bank lending to the sector.
'The market right now is in an autumn
chill, with some small firms failing,' Ren Zhiqiang, president of Beijing
Huayuan Property Co, told a forum last week. 'If the government doesn't do
something to snap the financing constraints on developers, then a deep
winter is coming.'
However, Beijing seems to be in no hurry
to halt the correction in the real estate market and is unlikely to resort
to the sort of rescue package that it rolled out last week for the sagging
Bank regulators reiterated in late August
that banks must not lend to developers for land purchases, a sign taken by
the market that the government would not loosen its grip any time soon.
With an industry-wide profit margin of
more than 30 per cent, many of the developers have scope to cut prices, at
least for now. -- 2008 September
Beijing luxury market
slides on oversupply
Oversupply in Beijing's luxury residential market has
dragged rental prices to a three-year low.
Colliers International estimated almost 2,000
high-end residential units will be completed in the second half of this
year, while 8,000 units are scheduled for completion in 2005.
The surplus supply has pushed the city's luxury
residential average rentals to a record low, said Colliers' general manager
in Beijing, Amanda Gao.
``Since 2002, we have seen residential buildings
built at a rapid speed, and this supply has managed to outstrip demand. This
year, we are anticipating a total of 3,000 new units to be launched, but
only 65 per cent will be absorbed,'' she said.
A similar scenario is seen for next year.
``As a result, average monthly rentals have slowly
edged downwards by 1.6 per cent to US$19.72 (HK$153) per sq metre over the
last quarter, the lowest we have seen for the past few years,'' Gao said.
``In the next 12 months, we expect rentals to fall by 3-5 per cent.''
Projects scheduled for completion this year
include Long Ge, Dong Fang Rui Jing, King Field Mansion, Genertime
International Centre and Beijing Golf Apartment, the property consultant
Most of the new supply would be located in
Chaoyang district, a popular location for expatriates.
``We expect Chaoyang to remain the premium living
area for the high-income group and foreign expatriates,'' Gao said.
``However, with continual supply, competition between new developments will
become intense, and we will likely see some very aggressive marketing
campaigns.'' Despite the falling rents, property sales are strong.
Palm Spring and Central Park are among
developments that raised prices by 10-20 per cent in the first half.
- by Eli Lau HONG
KONG STANDARD 30 July 2004
The demand among Hong Kong buyers for homes in
Beijing is on the rise, but buying is proceeding slowly because of the
distance between the two cities, property consultants said. Compared with
Shenzhen and Shanghai, Beijing is not a preferred option at present, they
That the relative remoteness of the capital was an
influencing factor was reflected in slow Hong Kong sales for a popular
residential project, Jianwai Soho, in downtown Beijing.
Last Saturday, Beijing-based developer Soho China
offered Hong Kong buyers 20 flats (each between 1,000 and 1,700 square feet)
in the fourth phase of the development, but only 12 flats had been sold as
Jianwai Soho, in which Soho China has a 90 per
cent stake, is a popular project in Beijing. The project topped the market
in the capital last year with sales of three billion yuan. It comprises a
seven-phase, 7.53 million square foot-residential development, and a
two-tower office development, in downtown Beijing. About 80 per cent of the
seven-phase residential flats were sold in the city.
David Hui, sales manager at Centaline (China)
Property Consultants, the sole marketing agent for Jianwai Soho, said the
sales response was in line with the company's expectations.
"We did not expect all 20 flats to sell
immediately, because Beijing is a new market to Hong Kong buyers," Mr
A total of 400 people turned up on the first day
Unlike flats in some southern cities that cost
less than one million yuan, the Jianwai Soho flats, priced from HK$1.5
million to more than $2.5 million, were not prompting potential buyers to
make quick purchases, Mr Hui said.
The selling price of $1,500 per square foot in the
fourth phase is 20 per cent higher than the price of flats in phases one,
two and three.
Michael Choi Ngai-min, chairman of Land Power
International, attributed the slow sales to the project's location.
He said buyers in Hong Kong showed keener interest
in Shanghai and Shenzhen: Shanghai promised strong economic growth, while
Shenzhen offered the attraction of close proximity to Hong Kong.
Mr Choi said Beijing was seen by Hong Kong buyers
as more the nation's capital than as a finance centre, and they believed the
city's price growth potential was not as strong as it was in Shanghai and
According to Deutsche Bank, residential prices in
Beijing fell about 10 per cent as a whole because of the launch of cheap
government housing. But there was a 5 per cent to 8 per cent growth in the
middle to high-end market last year, the investment bank said. -
by Peggy Sito 17 Mar 2004 South
China Morning Post
Beijing Builds For The Olympics,
and The Richest
The Capital is Growing, but is Much More Expensive Place to Live In
Whatever the rules, Beijing is buzzing when it
comes to property because of rising wealth, a concentration of riches, the
2008 Olympics and other factors. For people looking for a place to live,
especially the poor, it's not good news.
For a communist-ruled country that provided free
housing to all as a right, there is now a serious gap between the cost of
homes being built and the price most people can afford. According to Hong
Wang, associate professor of finance and real estate at Beijing's Tsinghua
University, the capital's housing is the least affordable in China.
The average price of commercial housing is 4,790
renminbi ($580) per square metre while per-capita annual disposable income
is 10,349 renminbi. Those figures put the ratio of housing purchase cost to
disposable funds for a double-income couple at 13.9 for Beijing. The figures
for Shanghai, Guangzhou and Shenzhen are 10, 8.6 and 6.7 respectively while
the nationwide average is 7.5.
Like many Western capitals, the market is weighted
toward the wealthy because developers want to make short-term profits and
lack a strategic view, says Wang. "They follow the crowd, they have a
herd mentality," he says. In Beijing, while prices are generally
rising, the old state system of housing support is being downgraded in the
name of market reforms. Wang wants the government to introduce a new support
system for ordinary people similar to schemes in Hong Kong and Singapore,
where land fees are waived to cut public-housing building costs or large
numbers of low-cost apartments are provided.
As in other capitals, prices are driven up in
Beijing because it is home to more wealthy people than any other city and
rich people from across the country have apartments there.
Meanwhile, construction in Beijing is intense as
it gears up for the 2008 Olympics. Because Beijing has few
international-level sports facilities, it will spend at least $2 billion on
Olympic-related items in the next few years. An idea of the size of the
shake-up was given by Zhang Xingye, deputy director of the City Construction
Commission, when he unveiled plans in May to quadruple the city's rail
network to 201 kilometres and resettle 347,000 people to make way for
Already the city is ramping up, as official
figures comparing Beijing's 2001 real-estate market to the previous year
show. Total completed investment stood at 78.38 billion renminbi, an
increase of 50% from 2000. Total new construction area was 29.9 million
square metres, up 66% on 2000. Residential sales were 11.27 million square
metres, 27% more than the previous year.
Much of this, of course, has little to do with the
Olympics. But quashing resistance from people being thrown out of home for
construction is much easier if developers and city officials are surrounded
by the strong whiff of patriotism that accompanies the games.
By David Murphy Far
East Economic Review Issue
cover-dated June 27, 2002