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China's Real Estate Market Growth Continues in Major Markets

Mar 19, 2008
The property market in China has continued its steady growth all through 2007. China's two first grade cities and some of its second grade cities persisted with substantial development and growth. The growth achieved in real estate market in some of the major Chinese cities is described below.

BEIJING - Beijing's property market witnessed development in each sector in the fourth quarter. There was an improvement of 2.8% points to 14.1% in the vacancy rate and there was a rise of 460.000 sm to the existing stock due huge completion of prime office projects. Rents were increased by 3.8% q-o-q, arriving at RMB 193.1 psm per month. The apartment market in Beijing profited most from the forthcoming Beijing Olympics considering the residential leasing market sectors. There was an increase of 5.6% q-o-q to RMB 228.5 psm per month for service apartment rents. Luxury apartment and villa rents got incremented as well. The huge asking of the Olympic Games resulted in the addition of 1.2% q-o-q in rents for ground floor retail space and 3.4% q-o-q in rents for first floor retail price.

SHANGHAI - Shanghai property market also did not fail to keep up with increased growth witnessed throughout 2007. The Shanghai prime office market maintained its upward climb during the fourth quarter, persisting with what we have seen throughout the year. Plaza 336 and the Chong Hing Finance Centre in Huangpu District were the two projects finished. They attained close to 54,000 sm to the market. Puxi and Pudong had the average office rentals increased by 5.9% and 5% q-o-q respectively due to high demand and cramping vacancy. Prime ground and prime first floor rents saw attractive growth of 4.9% and 4.7% q-o-q respectively. There was an improvement of 2.1%q-o-q to RMB psm per month for the average rent of industrial properties in the fourth quarter.

GUANGZHOU - The People's Bank of China (PBOC)'s fresh fiscal policies on real estate bank loans crawled the residential sales market in Guangzhou and proclaimed the mortgages at the conclusion of the third quarter. But other parts of the property market remained on a continuous advancimg path in the fourth quarter. Many residential projects were completed and transferred in Tianhe District in the fourth quarter. The leasing market was steady over all sectors. Consistency was a feature of the industrial sector throughout the quarter. The average land market rose by 1.5% q-o-q to RMB 452 psm. Rents for industrial amenities largely stayed unperturbed throughout the market.

TIANJIN - The average rental attained RMB 101.6 psm per month, a 2.9% increase q-o-q in the prime office market. Lack of supply in the fourth quarter meant the existing stock was used up with the average price reaching RMB 12,575 psm which is a 0.6% leverage q-o-q. Tianjin's total retail stock rose to 1.13 million sm at close of the year. Ground and first floor rents receiver slight q-o-q growth of 2.2% and 4.3%, ending in RMB 17 psm per day and RMB 10.2 psm per day respectively.

SHENZEN - The Shenzhen prime office leasing market progressed well during the fourth quarter of 2007. Comparing to last quarter there was a feeble increase of 5.3% for prime office space. However, moderate response prevailed in the prime office sales market with the average asking price gaining by only 0.5% q-o-q. The overall vacancy rate fell from 16.2% in September to 15.9% in December. A 120,000-sm contemporary shopping mall named coastal city was finished and began functioning in the upcoming submarket of Houhai/Shekou in December. The overall vacancy rate of Shenzhen was 5.4% at the conclusion of the fourth quarter.

XIAMEN - The energetic prime market did not have any new completions in this quarter because of the inadequate supply which affected the prime office leasing market. However the average rental and price had a consistent increase of 3.3% and 4.4% q-o-q respectively. Throughout the past four quarters vacancy rates continued to slip down and reached 3.9% at year-end. The perception is that Nanzhong Dadi Plaza in Zhongshan Road Business Circle and Jiazhou City Plaza in east Xiamen will begin to operate in the first quarter of 2008.
About the Author
Wantanee Khamkongkaew is an independent author evaluating and commenting on leading International Property Consultants in Asia and Greater China , especially CB Richard Ellis.
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