shanghai property market newsletter / june 2015 june 2015€¦ · 2006 and year 2010. according to...

Shanghai Property Market Newsletter / June 2015

Aquaspace Group1

by A

quas

pace

Gro

up M

arke

ting

Team

June

2015Shanghai ProPerty Market newSletter


Aquaspace Group2

land Market

I n June, the transacted area of land for constructing residential properties was 409,822 square meters, up 5.4%

m-o-m. The transacted area of land for constructing commercial buildings or offices was 357,797, up 2.65 times m-o-m. The transacted area of land for constructing industrial facilities was 124,458 square meters, down 70% m-o-m. There were two pieces of land for constructing commercial

+5.4%

-70%

+265%

Transacted floor space of land for building residential properties

Transacted floor space of land for building industrial properties

Transacted floor space of land for building commericial

properties

Chongming Island

Changxing Island

Hengsha Island

Jiading District

Baoshan District

Hongkou District

Zhabei District

Yangpu District

Putuo District

Huangpu District

Xuhui District

Qingpu District

Songjiang District

Jinshan District

Fengxian District

Nanhui District

Minghang District

Pudong District

Jiangsu Province

Pingliang Community, Yangpu District 01E2-01, 02

the land area: 34,651 square meterClosing bid price: 3.4 billion RMB yuanFloor price: 42,725 RMB yuanthe use purpose of the assigned land: Commercial and Residential Building, OfficePremium rate: 46.12%Successful bidder: Poly Group, zenhen group and Shandong gold group

Jiangwan Town, Hongkou District A06-02

the land area: 8,916 square meterClosing bid price: 0.65 billion RMB yuanFloor price: 31,793 RMB yuanthe use purpose of the assigned land: Residential Building Premium rate: 59.02%Successful bidder: Poly Group, zenhen group and Shandong gold group

Dinghai Community, Yangpu District H3-1

the land area: 7,147 square meterClosing bid price: 0.22 billion RMB yuanFloor price: 16,800 RMB yuanthe use purpose of the assigned land: Office and commercial buildingSuccessful bidder: The Greenland Group

Dachang Town, Baoshan district Unit W121301, No. 38-02

the land area: 58,779 square meterClosing bid price: 3 billion RMB yuanFloor price: 23,277 RMB yuanthe use purpose of the assigned land: Residential Building Premium rate: 89.67 %Successful bidder: CMPD and Pingan Group

City North High- Tech Park, Zhabei District, Unit N070501, No. 09-03

the land area: 102,596 square meterClosing bid price: 8.795 billion RMB yuanFloor price: 38,062 RMB yuanthe use purpose of the assigned land: Residential Building and officePremium rate: 26.97%Successful bidder: China Resources Group


Aquaspace Group3

PoliCy

T he central Bank of China decides to cut the interest rate and reserve ratio since 28th June 2015. Under the new regulation, the reserve

ratio will decrease by 0.5 percentage point. The interest rate will decrease by 0.25 percentage point in order to cut the cost of corporate financing.

For those people who already have loans, banks will adjust the interest rate according to the new standard since 1st Jan 2016.

China Central Bank Cuts Interest Rate

residential properties in June. Jingrui investment group and Jiajing investment group purchased the using right of the land in Jiangwan town of Hongkou district. The floor price was 32,000 RMB yuan and the total price of the land was 0.65 billion RMB yuan. CMPD and Pingan Group jointly purchased a piece of land in Dachang town of Baoshan district. The floor price was 3 0,000 RMB yuan and the total price was 3 billion RMB yuan. The rest pieces of land were for resettlement housing. The area of transacted land for constructing offices or commercial properties significantly increased. Poly Group, zenhen group and Shandong gold group jointly purchased the using right of a piece of land in Pingliang community of Yangpu district for constructing commercial, residential buildings and offices for 3.5 billion RMB yuan. The floor price of the land was 43,000 RMB

yuan, the highest floor price in June. The second most expansive land was the piece of land in City North High Tech Park purchased by China Resources Group. The floor space of which was 38,000 RMB yuan and the total price of the land was 8.795 billion RMB yuan.

There were some pieces of new land enter the market. A piece of land in the north part of Shanghai railway station square (Zhaibei district) opens the application process from 8th June to 13th July. The land area is 77,000 square meter and the initial price is 5.871 billion RMB yuan. There is another piece of land opening its application process from 9th July to 3rd August. The land area is 1,658 suqare meter and the initial price is 75 million RMB yuan.

Interest Rate

1. Deposit

(1) Current Deposit

(2) Fixed Deposit

3-Month

1/2 Year

1-Year

2-Year

3-Year

2. Loan

< 1-Year (Including 1 Year)

1-Year to 5-Year (Including 5-Year)

> 5-Year

3. Individual Housing Fund

< 5-Year

> 5-Year

0.35

1.60

1.80

2.00

2.60

3.25

4.85

5.25

5.40

3.00

3.50

New fINaNcIal INsTITuTIoN rmb deposIT aNd loaN beNchmark INTeresT raTe

Source: The People's Bank of ChinaRestrictions On House Purchasing by Foreigners is Possibly Canceled

c hinese government is considering canceling the policy that constrains foreigners to buy properties in China. However, foreign capital can only invest commercial

properties or offices in first-tier cities and still has restrictions on residential properties investment. The ministry of Housing and Urban-Rural Development of the People’s Republic of China and State Administration of Foreign Exchange have issued the restraint policies on house purchasing by foreigners twice: In 2006 and year 2010. According to the policy, each foreign

individual only can buy one residential property. Foreign institutions can only purchase necessary properties for their business in registered city. In March 2015, the national development and Reform Commission and the Ministry of Commerce released the "catalog of guidance for foreign investment (2015 Version)”. They removed all the restricted terms on foreign investment on real estate in China, but they still constrain foreign capital to construct golf courses and villas in China.


Aquaspace Group4

China Removed Regulation on Loan-to-Deposit Ratio

T he State Council on 24th June 2015 passed a draft amendment to China's Banking Law that gives banks more freedom to lend by removing the 75 percent

loan-to-deposit ratio stipulation. China has kept the 75-percent ratio unchanged for 20 years. The move will enable financial institutions to increase lending to agriculture, small and micro-businesses. According to China Banking Regulatory Commission’ data, the average loan- to- deposit ratio of China’s commercial banks was 65.67% in 2015 Q1. The loan-to-deposit ratio of 10 listed commercial banks are over 70% and only 6 listed commercial banks’ loan-to-deposit ratio are less than 70%. The

removal of the loan-to-deposit ratio may not necessarily lead to a substantial growth in credit as the ceiling is not a major constraint on growth. The lack of financing demand, banks’ reluctance to lend due to risk controls, as well as requirements on capital adequacy ratio is among the factors that have hampered credit growth. According to China central bank’s statistics, the loan-to–deposit ratio of small and middle commercial banks was 81.81% in the end of 2014, higher than large banks by 10.08 percentage points. It is suggested that the banks in Shanghai Free trade zone do not have regulations on loan-to-deposit ratio.

eConoMy and induStry

h SBC China PMI will renamed as Caixin PMI since August 2015. The HSBC will not sponsor Markit research company to write PMI data. HSBC PMI is a bit

different from China official PMI. HSBC PMI focus on small and middle size enterprises while china official PMI focus on large state-owned enterprises. Markit also announced the list of other sponsors. Nikkei will be the sponsor of PMI research on Asia excluding China. Emirates NBD will be the sponsor of PMI research on United Arab Emirates, Saudi Arabia, Egypt and Dubai.

In June, the China official Manufactured PMI data was 50.2, the

PMI

fifth month which higher than 50. The performance of High-tech and consumers’ good related manufacture is better than the overall manufactures. The HSBC PMI was 49.4 in June, slightly higher than 49.2 in May. The HSBC PMI still below the 50 which indicate that manufacture is still weak and the economic policy should further ease. China official service PMI was 53.8 in June, slightly higher than May. The new orders indicator was 51.3, the highest since Jan 2015. The expansion grwoth rate of financial sector Internet and information technology sector and logistics sector accelerated in June.

Developers’ First Half Year Performance

a ccording to China index Academy’s report on Developers’ H1 performance, in the first half year, Everground group has achieved 60% sales target and

Wharf Holdings has achieved 59% sales target, ranked the first and second developers respectively in terms of target completion rate. Some developers will not only focus on sales performance but also focus on receivable ratio and profit margin. Vanke and Shimao no more set the sales goal but set standard of receivable ratio and profit margin. Sunac focus more on the growth rate of

sales volume of liabilities. Almost all the developers focus on consumers who have rigid demand for residential properties. Evergound group’s ordinary commercial housing accounts for over 90% of the total products, while Green Land and Shimaos’ ordinary commercial housing account for over 85% of their total products. Except Green town group and Sunac who focus on the market of premium residential property, other developers’ sales volume of ordinary commercial housing account to over 70% of the total sales volume.


Aquaspace Group5

O2O Real Estate Business is Hot

l ianjia real estate group renamed as lianjia.com recently to create an O2O platform valued thousand-billion yuan. In 2015 Lianjia.com merged five property agencies. The

business of Lianjia.com include house leasing business, house sales business, asset management and financial management. Lianjia also established a fundation to compensate the buyers when they purchase second-hand house and face the following conditions including the haunted house, radiation, owned property management fees before transactions and broken facilities. In the first half year of 2015, long-stay house leasing business was also hot. VC and PE invest huge amount money into this market, which indicate the strong demand for serviced apartment in China, especially in first-tier and second –tier cities. In March 2015, Shanghai Yujian Serviced Apartment got over 10 million RMB yuan investment. In May 2015, Mofang Serviced Apartment got 200 million RMB yuan investment. The investment amount even exceeded the investment in You+ international apartment from Leijun. There are several channels to finance the young

serviced apartment companies. The main channel for these serviced apartments to gain investment is VC or PE. Some serviced apartments also gain the capital through the similar way like REITs. The serviced apartment companies will divide the real estate fund into several parts and sell them to several Limited

partners. These limited partners will get annual return from the rent and the serviced apartment company will repurchase the fund on the fund maturity date. The investment return of the product is usually higher than the general personal investment products so that investors are more interested in these projects. The Internet finance is a new concept. Some serviced apartment companies established partnership with P2P companies, designing and selling their real estate related financial products.

Some serviced apartment companies adopt to “ light asset “ model, for example, landlord can ask serviced apartment companies to manage their properties. It's more flexible. These serviced apartment companies all have or join O2O platform to bring landlord or tenants efficient and satisfied service.

O2OPlatform

Real EstateCompanies Customer

Information

Pay PayInf

ormati

on

Showing the rooms

Shanghai reSidential PROPERtY MaRkEt

I n June 2015, the average price of Shanghai residential property kept rising. The average supply price of house was 35,498 RMB yuan per square meter, up 11.8% m-o-m and

7.9% y-o-y. The average demand price is 32,665 RMB yuan per square meter, up 4.0% m-o-m and 23.2% y-o-y, the highest in the past 18 months. The transaction floor space of Shanghai residential property was 219 square meters, up 4.3% m-o-m and 28.1% y-o-y. The house market was hot in June. One of the reasons is that Chinese government issued several easing policies

to encourage residence to purchase properties. Another reason is due to the Chinese bull stock market in May. In May, lot of capitals flowed into Chinese stock market. The FTSE Group included China’s A-shares in two new transitional indexes for emerging markets. Another index compiler MSCI is considering including the shares in their global benchmarks. Many people choose to buy real estate after they earned money from the stock market, especially after the middle of June. More and more investors exited the stock market since it had the signal to fall.


Aquaspace Group6

Even regulators move to stimulate the property market, the target buyers are who have rigid demands for residential properties in first-tier cities. Investments in residential properties are still constrained and which result to some capital flow to oversea property market. It is

estimated that Shanghai residential property market will keep stable. The fluctuation of property market in China depends a lot on governments’ policies.

300

250

200

150

100

50

0

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

JuNe 2015 shaNghaI resIdeNTIal properTy TraNsacTIoN floor space (10,000 square meTers)

JuNe 2015 shaNghaI resIdeNTIal properTy prIce

Supply Price (Offer Price, RMB yuan)

Demand Price (Transaction Price, RMB yuan)

Jan

20

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5

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Jun

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Source: Aquaspace Research

Transaction Floor Space (10,000 sq.m)

Source: Aquaspace Research

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01

3

No

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3

No

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Oct

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Jan

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01

5

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Oct

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13

Se

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Aquaspace Group7

about uS

Aquaspace Investment & Consulting was founded in the Lujiazui financial district of Shanghai in 2005, owned by Royal Bank of Canada Trust. We provides world-class financial and management services and we has nine sub-companies providing professional services, including prime real estate leasing and sale service, real estate investment consulting service, interior design service. We have our own digital and paper Magazine Vantage and Mediterranean-style Aqua Club. Besides, Aqua Travel designs unique trips for our clients. Aquaspace Group also takes social responsibility to create a better world, so we set Aqua Arts Foundation and Aqua Charitable Trust as well.

Please visit our website for more information: www.aquaspacegroup.com

please coNTacT us for furTher INformaTIoN

INquIry

AquAspAce Group mArketinG [email protected]+86 (021) 5881 0143*8001

* This report is for general informative purpose only. While we make every effort to ensure the accuracy of the data and information, Aquaspace accepts no liability for any direct or consequential loss arising from its use. This information is presented by Aquaspace research team and all rights are reserved.

shanghai property market newsletter / june 2015 june 2015€¦ · 2006 and year 2010. according to...

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