Shanghai – January 2021 MARKET IN Residential Sales MINUTES

Shanghai �C January 2021

MARKET

IN

MINUTES

Savills Research

Residential Sales

Savills team

Please contact

us for further

information

RESEARCH

James Macdonald

Senior Director

China

+8621 6391 6688

james.macdonald@

.cn

CENTRAL MANAGEMENT

Siu Wing Chu

Chief Executive Officer

China

+8621 6391 6688

siuwing.chu@

.cn

Prices hit record highs

Limited supply pushed up high-end residential prices.

? O verall first-hand commodity residential supply fell 8.9%

quarter-on-quarter (QoQ) to 2.4 million sq m, up 28.5%

year-on-year (YoY).

? First-hand commodity residential transaction volumes

decreased 1.0% QoQ to 2.9 million sq m, up 48.8% YoY.

? Average transaction prices decreased 4.4% QoQ to

RMB52,573 per sq m, down 2.8% YoY.

? First-hand commodity residential transaction volumes

increased 21.0% YoY to 9.2 million sq m for the full-year

2020; meanwhile, supply totalled just 7.5 million sq m as the

market shifts in favour of sellers.

? First-hand high-end apartment supply totalled roughly

110,000 sq m in Q4/2020, down 4.5% QoQ. Apart from new

projects like West Bund Park and Art Park, new batches of

existing projects have also been added to the market.

? First-hand high-end apartment transaction prices increased

1.2% in Q4/2020 to an average of RMB116,300 per sq m, up

5.7% YoY.

research

? Thirteen land plots with for-sale residential components

were sold in Q4/2020. Ten of the plots were majority

for-sale residential with a combined site area of 476,000

sq m, buildable area of 794,000 sq m and an average

accommodation value (AV) of RMB35,047 per sq m.

��Developers limited by the

��345 rule�� are actively

promoting projects in the

mass market, while the sales

and subscription rates of

high-end projects are heated

due to home buyers�� high

expectations.��

JAMES MACDONALD, SAVILLS RESEARCH

1

RESIDENTIAL SALES

Shirley Tang

Senior Director

Shanghai

+8621 6391 6688

shirley.tang@

.cn

Michelle Zhou

Director

Shanghai

+8621 6391 6688

michelle.zhou@

.cn

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Residential Sales

GRAPH 1: First-Hand Commodity Residential

Market Supply, Transaction Volume And Prices

By Quarters, 2014 to 2020

Transaction volume (LHS)

Supply (LHS)

Average transaction price (RHS)

14

70,000

12

60,000

10

50,000

8

40,000

6

30,000

4

20,000

2

10,000

0

0

mn sqm

80,000

RMB per sq m

16

Source Shanghai Real Estate Trading Center, Savills Research

GRAPH 2:Second-Hand Residential Sales Market

Transactions And Prices, Jan/2016 to Oct/2020

Transaction volume (LHS)

Average price (RHS)

5.0

50,000

4.5

45,000

4.0

40,000

30,000

2.5

25,000

2.0

20,000

1.5

15,000

1.0

10,000

0.5

5,000

0.0

0

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

Oct-17

Jan-18

Apr-18

Jul-18

Oct-18

Jan-19

Apr-19

Jul-19

Oct-19

Jan-20

Apr-20

Jul-20

Oct-20

million sq m

35,000

RMB per sq m

3.5

3.0

MARKET FOCUS

Tightening on housing-related loans

Ceilings on property loans by banks were

announced by the People��s Bank of China and

the China Banking and Insurance Regulatory

Commission on the last day of 2020. Banks,

along with other financial institutions, are

categorised into five tiers by their institution

type, assets under management and other

characteristics. Effective January 1st, 2021,

the new regulation aims at tightening the

supply end of financing, while the ��345 rule��

announced earlier 2020 was more of a control

on the demand end.

The overall level of restrictions is set to a

similar level to the existing bank loan ratios

in 2020. For banks exceeding the set lines,

a grace period of two years allows them to

adjust the ratio of property-related loans to

other sectors. The new regulation is assumed

to curb housing speculation as mortgage

loans grew from 14.3% of total loans in 2015 to

21.7% in 2020. Meanwhile, property/developer

loans have been stable at 7.2%. Rental housing

related loans are excluded while calculating

the limited loan quota, which indicates

continued support in the rental housing

sector.

OVERALL COMMODITY

RESIDENTIAL MARKET

First-hand Market - Both supply and

transaction maintained their momentum

in Q4/2020 after the market��s big surge in

Q3/2020. First-hand commodity residential

supply decreased 8.9% QoQ to 2.4 million

sq m, though up 28.5% YoY. First-hand

commodity residential transaction volumes

decreased 1.0% QoQ to 2.9 million sq m,

though up 48.8% YoY.

Average transaction price fell 4.4% QoQ and

2.8% YoY to an average of RMB52,573 per

sq m. Transaction areas within the middle

ring road decreased 20.7% QoQ, while areas

between the outer and suburban ring road

increased 13.7% QoQ, accounting for more

than half of the total transacted area.

Source Shanghai Real Estate Trading Center, Savills Research

First-hand commodity residential transaction

volumes increased 21.0% YoY to 9.2 million

sq m for the full-year 2020, a new high since

2016. Average transaction price during the

full-year 2020 increased 3.2% to RMB55,739

per sq m.

Second-hand Market - The surplus demand

in the first-hand market has increased

transactions in the second-hand market

during Q4/2020. Market demand brought

total transaction volume up 25.7% QoQ and

82.7% YoY to 7.9 million sq m. Projects listing

prices of school districts and areas with no

new supply surged as market heated up.

Listing prices of some properties in Yuqiao

and Qiantan increased about 50% compared

to earlier 2020. With an increase of upgrade

demand in the second-hand market, the

average transaction price was pushed up to

RMB42,400 per sq m, up 2.6% QoQ and 10.3%

YoY. Average transaction price in Pudong

and Huangpu both increased 14% YoY, while

average transaction price in Qingpu increased

18% YoY, exceeding RMB30,000 per sq m

thanks to the influence of the Hongqiao

Transportation Hub and Metro Line 17.

HIGH-END RESIDENTIAL SALES

MARKET

First-hand high-end apartment supply

totalled approximately 110,000 sq m in

Q4/2020, a decrease of 4.5% QoQ and 28.7%

YoY. New supply came from newly launched

West Bund Park and Art Park, as well as

batches of existing projects such as the

Greenland Bund Centre.

2020 witnessed large new supply from

traditional high-end residential zones like

Xintiandi, Huangpu and Lujiazui Riviera. New

projects launched in high-end areas like Biyun

and Gubei, which haven��t seen new supply

in a decade, offered home buyers specifically

looking in those areas alternative options to

buying second-hand homes.

First-hand high-end apartment transaction

volumes decreased by 24.5% in Q4/2020,

totalling 169,000 sq m, though up 29.4% YoY

TABLE 1:First-Hand Commodity Residential Market By Property Type

2020Q4

2020

APARTMENT

VILLA

OVERALL

APARTMENT

VILLA

OVERALL

SQ M

2,274,743

104,115

2,378,858

7,140,855

407,985

7,548,841

YoY (%)

30.8%

-7.4%

28.5%

1.8%

-31.3%

-0.8%

SQ M

2,616,625

257,242

2,873,867

8,229,044

988,257

9,217,301

YoY (%)

49.6%

41.5%

48.8%

22.1%

12.7%

21.0%

RMB PSM

52,167

56,695

52,573

55,371

58,799

55,739

YoY (%)

-2.6%

-4.6%

-2.8%

2.8%

6.6%

3.2%

SUPPLY

TRANSACTIONS

AVERAGE PRICE

research

2

Residential Sales

and still exceeding supply. Meanwhile, the

price index increased 1.2% QoQ, pushing

prices to an average of RMB116,300 per sq m,

up 5.7% YoY.

GRAPH 3: First-Hand, High-End Apartment Market

Supply, 2016 to 2020

Primary

450

Secondary

Emerging

RESIDENTIAL LAND MARKET

Thirteen land plots with for-sale residential

components were sold in Q4/2020. Ten of

the plots were majority for-sale residential

with a combined site area of 476,000 sq m,

buildable area of 794,000 sq m and an average

accommodation value (AV) of RMB35,047

per sq m. The most expensive land plots

were a site in Zhongxing, Jing��an District

that sold for RMB72,000 per sq m. The land

was acquired by the JV of Ronsine, Poly, and

China Merchants and is adjacent to Oriental

One (����·Ҽ��), currently selling for about

RMB120,000 per sq m.

400

350

'000 sq m

300

250

200

150

100

50

2018

Q3

Q4

Q1

2019

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2017

Q2

Q3

Q4

Q1

2016

Q2

Q3

Q4

Q1

Q2

0

2020

Source Shanghai Real Estate Trading Center, Savills Research

GRAPH 4: First-Hand, High-End Apartment Market

Transaction Volumes And Prices, Q1/2016 to

Q4/2020

Secondary transaction volume (LHS)

Primary price index (RHS)

Emerging price index (RHS)

450

170

400

160

350

150

300

140

250

130

200

120

110

100

50

90

0

80

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

150

100

Q4/2010 = 100

'000 sq m

Emerging transaction volume (LHS)

Primary transaction volume (LHS)

Secondary price index (RHS)

2016

2017

2018

2019

2020

Six pure for-lease residential land plots

were sold in Q4/2020 with an average AV of

RMB5,592 per sq m. All plots were sold at

their reserve prices.

RESIDENTIAL SALES MARKET

OUTLOOK

Several high-end projects started marketing

units towards the end of 2020 and are

anticipated to launch in Q1/2021. Projects

including Ocean One (������纣��Ҽ��) and

Qingyun One (�ڴ�����Ҽ��) launched on

January 9th, 2021. Shanghai Bay (�к����ͥ),

Millhouse Residence (��ʢ������) and Nove

Mansion III (��®����) are also expected to

launch later in Q1/2021. Additionally, urban

renewal projects in the city core will foster a

hot market in the coming years.

The land market was particularly strong in

2020. Further urban redevelopment projects

in Hongkou, Yangpu and Jing��an will likely

unlock several key plots. However, tighter

developer financing may reduce competition

for these plots as potential bidders conserve

capital. Government language in the run-up

to the ��14th Five-year Plan�� continues to

reiterate mantra that ��homes are for living,

not speculating��. The responsibility continues

to reside with local authorities to regulate

the market and control price growth through

distinct policy approaches.

TABLE 2: Top Five Apartment Projects By First-hand Transaction Prices,

Q4/2020

PROJECTS

DISTRICT

AREA

TRANSACTION

AREA

(SQ M)

AVERAGE

TRANSACTION

PRICE

(RMB PSM)

Bund House

Huangpu

Huangpu

Riviera

1,371

173,900

Shanghai Arch

Pudong

Lujiazui

Riviera

1,216

173,700

Lakeville V

Huangpu

Middle

Huaihai Rd

9,365

160,600

Above the Bund

Hongkou

North Bund

361

157,600

Nove Mansion

Pudong

Lujiazui

Riviera

476

155,200

Source Shanghai Real Estate Trading Center, Savills Research

Source Shanghai Real Estate Trading Center, Savills Research

GRAPH 5: For-Sale Residential Land Transaction Area

(Buildable Area) And AV, Q1/2016 to Q4/2020

2.0

50,000

1.8

45,000

1.6

40,000

1.4

35,000

1.2

30,000

1.0

25,000

20,000

15,000

0.4

10,000

0.2

5,000

0.0

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

0.8

0.6

2016

2017

2018

TABLE 3: Top Five Apartment Projects By First-hand Transaction Prices, 2020

Average price (RHS)

RMB per sq m

million sq m

Total GFA (LHS)

2019

2020

PROJECTS

DISTRICT

AREA

Tomson Riviera

Pudong

Lujiazui

Riviera

1,364

263,400

Suhe Creek

Jing��an

Suhe Creek

605

234,600

Bund House

Huangpu

Huangpu

Riviera

8,582

163,200

Lakeville V

Huangpu

Middle

Huaihai Rd

33,752

162,100

Shanghai Aroma

Garden

Huangpu

Laoximen

7,816

152,800

Source Shanghai Real Estate Trading Center, Savills Research

Source Shanghai Municipal Bureau of Planning and Land Resources; Savills Research

research

AVERAGE

TRANSACTION

PRICE

(RMB PSM)

TRANSACTION

AREA

(SQ M)

3

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