Real Estate Price Growth: Shanghai, Beijing in World's Top 10

[Shotgunner51]

Shanghai, Beijing in world's top 10 for housing price growth

2015-11-05 15:23 chinadaily.com.cn

With the price of housing growing respectively by 14% and 12% per year, Shanghai and Beijing rank 7th and 8th among the world's top 10 cities for price growth, according to CBRE, the world's largest commercial real estate broker.

Policies such as interest rate cuts and lower down payments for first-time buyers are believed to have stimulated purchasing demand in Beijing and Shanghai, although the average price in the rest of Chinese cities fell 3% year on year.

The big increase in transaction volume of residential property in Shanghai and Beijing began in March when the central bank said second home buyers who have paid off their first home loans can be viewed as first-time buyers and qualify for a minimum down payment of 30%.

Home sales in Shanghai rose with the average price reaching $362,900 each (City average; Downtown average $10,000 per sq.mt), around $5,000 less than the price in Beijing.

Big cities such as Beijing and Shanghai are popular among job-seekers and businessmen, who contribute greatly to the housing price boom.

"Property developers and investors are more prone to invest in projects and land in first-tier cities, which have more appealing job opportunities due to the enterprises' expansion," said Chen Zhongwei, China head of the CBRE's research department.

Hong Kong, one other Asian cities in the top 10 has an average annual growth of 20 percent, just 1.6 percent lower than Irish capital Dublin, which tops the list.

 

[Shotgunner51]

Asia luxury retail revival ahead - Inside Retail Asia

iAPM Mall, Shanghai

November 3, 2015

While Asia Pacific may be experiencing a slowdown in luxury retailing right now, three key trends will fuel a renaissance in coming years.

That’s the core finding of a research report by property specialist CBRE, The Future of Luxury Retail in Asia Pacific: New Demand Drivers and Shifting Occupier Requirements, which promises property owners can expect “a solid new stimulus for demand” in the coming years.

Most major luxury retailers are now well established in Asia Pacific – their with China and Hong Kong penetrations already at 89 per cent and 81 per cent, respectively. And after several years of rapid expansion, these markets are approaching saturation point.

“Accounting for one-third of personal luxury goods sales globally in 2014, Asia Pacific is a key region for international luxury brands with key markets including China, Hong Kong, Japan, Singapore, South Korea and Taiwan. However, the high growth period for luxury retailers in the region is gradually coming to an end,” commented Dr Henry Chin, head of research, CBRE Asia Pacific.

”Over-saturation, surging operational costs and weaker retail sales – especially in Hong Kong due to the slowing mainland China economy – have prompted retailers to consolidate their existing store networks and slow their rate of entry into new markets focusing on operational efficiency,” said Chin.

But here is where there is hope: CBRE has identified three emerging trends which will partially offset some of the negative effects arising from the slowdown and compensate for the loss of demand.

• The Emergence of Affordable Luxury

Often referred to as bridge brands, affordable luxury retailers – for example Michael Kors – provide high quality branded goods at a lower price tag than top-tier luxury retailers. Several top-tier luxury brands are already so well established in the region that they are at risk of overexposure, a trend which is prompting many consumers to look for differentiation.​

• Inclusion of F&B

Recent years have seen luxury brands begin to expand beyond their core fashion businesses into the F&B sector – examples include 1921 Gucci in Shanghai iAPM and Cafe Dior by Pierre Hermé on the top floor of Christian Dior’s flagship store in Seoul – transitioning their brand from being totally fashion-oriented to more lifestyle-driven. Including an F&B component in stores enables luxury retailers to provide their consumers with a more complete experience in which they can shop, relax and socialise.​

• Growth of Luxury Childrenswear

As of 2014, Asia Pacific was home to 807 million people aged below 14, representing more than 20 per cent of the total population, offering an enormous opportunity for growth in this segment. The emergence of luxury childrenswear brands has been welcomed by landlords as many of them are looking to expand their offering into toys, bookstores and playrooms in order to attract and retain foot traffic amid competition from online retail.

“With the momentum behind these trends, this will account for a bigger slice of leasing demand for prime retail space,” says Joel Stephen, senior director, head of retailer representation, CBRE Asia.

“Retailers and landlords can benefit from the projected growth in these market segments.”​

Changes in Luxury Retailers’ Real Estate Requirements

The emerging retail trends – combined with changing tourism patterns and the ongoing slowdown of the region’s luxury retail sector – are already impacting luxury retailers’ real estate requirements, resulting in new, and in some cases, weaker demand for different types of retail property.

“The change in shopping behavior among mainland Chinese tourists – who are demonstrating a stronger preference for shopping in Europe and Japan – has prompted luxury brands to review their expansion and rationalise their real estate portfolios, strategies and requirements. Since most luxury retailers remain cautious towards expansion, especially in China, retailers are now focusing on consolidating their footprint into a solid network of stores in high quality locations, as opposed to expanding rapidly and opening many smaller stores, in order to extract the highest value from their sales network,” says Chin.

Some of the key trends that CBRE have identified include:

• Weaker interest in department stores despite continued interest in prime locations;
• Stronger focus on flagship stores, displaying more product lines, thus making a stronger statement in the market;
• Increased popularity in short-term opportunities for brands to set up exhibitions, pop-up and concept stores, and workshops, to generate greater consumer awareness;
• Affordable luxury brands continuing to drive demand, encouraging more shopping center landlords to offer them anchor tenant space; and
• More interest in upper floor retail space, but limited to top-tier malls and driven by F&B and childrenswear segments.

Says Stephen: “Driven by the emergence of affluent consumers and the rise of the number of millionaires in the region, Asia Pacific will remain a hugely important market for international luxury brands with new names entering the region.

“Even though leasing demand will slow to a more sustainable level, prime space in core areas will continue to be keenly sought after.”

 

[mpk1988]

The govt should step in and control it before it becomes an unmanageable bubble. China needs to careful and lea n from some of the mistakes in the west. Then it can actually keep progressing into a wholesome and developed country and avoid a hard landing.

 

[DaiViet]

That is bad thing actually. For country with gdp $8k per year and a house cost $365k. Surely cities are for the elite rich. This creates gap income inequality and housing bubbles. Vietnam had experience such grow in real estate in the past and calloapse eventually. Not to mention China economy is slowing down, this contribute to more risk.

 

[Shotgunner51]

The govt should step in and control it before it becomes an unmanageable bubble. China needs to careful and lea n from some of the mistakes in the west. Then it can actually keep progressing into a wholesome and developed country and avoid a hard landing.

I don't think the government can, or should, simple intervene in prices tactically. I am more inclined to more comprehensive and sophisticated approaches, like what the government is doing now

(1) Free market approach on private properties, let private capital go into financial institutions, and let the market decide interest rate, government or SOE begin to walk away from this market. Yes in Shanghai private market is booming, catering needs for HNWI or HNW families, non-resident investors/workers/students, etc. Now an average 150 sq.m 3-br-apartment in my district is around $1.5 million each. Government can collect good property tax (房产税) as well.

(2) Social welfare approach on basic housing needs, expand public housing programs massively. After years of study of Hong Kong or Singaporean model, comprehensive housing programs are developed catering needs for those fall under social welfare protection. In the last 5-year plan (12th), 798,000 units were provided, around 20% of total. The ratio is not high compared to Hong Kong (48.8%) or Singapore (80%), so in the next 5-year plan (13th) the set target is 30%. Given the significant proportion of non-Shaghainese (非上海户籍) here, in my opinion, a public-private ratio of 40:60 is adequate.

Like professor Larry Lang of CUHK has explained, the government can use revenue from a booming private housing market to support its welfare programs in public housing. With support from central government, People's Bank of China, this initiative was executed by various cities in the last 5-year plan (12th):

• 4 Direct Municipalities (中央直辖市; Beijing, Shanghai, Tianjin, Chongqing)
• Capitals of the 22 Provinces (省会; 含10个副省级市)
• Capitals of the 5 Ethnic Autonomous Regions (自治区首府/省会)
• The 5 Vice-Province Cities (副省级市; Dalian, Qingdao, Ningbo, Xiamen, Shenzhen)
• Other than the 36 cities above, some in rest of the 580+ cities are financially qualified.

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About Public Housing in Hong Kong

Running in parallel with the private sector, there is a huge public housing sector which is a set of mass housing programmes through which the Government of Hong Kong and provides affordable housing for Hong Kong citizens, subject to a range of restrictions and eligibility requirements. Public housing is mainly built by the Hong Kong Housing Authority and the Hong Kong Housing Society. Rents and prices are significantly lower than those for private housing and are heavily subsidised by the government. Programs include:

• Public Rental Housing
• Home Ownership Scheme
• Tenants Purchase Scheme
• Flat-for-Sale Scheme (住宅發售計劃)
• Sandwich Class Housing Scheme
• Interim Housing

According to the 2006 census, 3.3 million people or 48.8% of the population of Hong Kong lived in rental or subsidised-sale public housing; within that group, 31% lived in public rental housing, 17.1% lived in Housing Authority subsidised-sale flats and 0.7% lived in Housing Society subsidised-sale flats

For official website, check below:

Home | Hong Kong Housing Authority and Housing Department

About Public Housing in Singapore

Similarly private housing market in Singapore is very expensive. Public housing is managed by the Housing and Development Board (HDB). The majority of the residential housing developments in Singapore are publicly governed and developed. As of 2013, 80% of the resident population live in such accommodation. These flats are located in housing estates, which are self-contained satellite towns with schools, supermarkets, clinics, hawker centres, and sports and recreational facilities.

For official website, check below:

HDB InfoWEB: Public Housing in Singapore : About Us