Property Market

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Property Market

• MAINLAND CHINA

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Beijing and Shanghai
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No Single Market

• A series of markets within a market primary,
  secondary and tertiary cities
• Limited quality product
• Absence of a secondary market
• Lack of transparency and consistency
• Real efforts being made to wipe out corruption
  and speculation at official level
• Still an emerging market

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No Single Market (continued)

• Government tightening controls over land market
  vast amounts of agricultural land already lost
  illegally to development
• Growing foreign investor influence
• Mainland China looks very much to Hong Kong and
  other international centres as examples for
  future policies

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Housing Provision

• Over 40 of population live in urban areas some
  550 million people
• Average living space increased from 4 sq.m. in
  early 1980s to 22 sq. m. today
• Housing reform in 1998 move away from
  traditional allocation as part of employment to
  open market as main channel of provision
• Commercial housing growth since 1998 averaged 35
  per annum
• Estimated 82 of allocated public housing has
  already been sold to workers/employees

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Structure of the Housing Market

• Each city operates as a separate market
• Commercial commodity housing merged foreign and
  local markets
• Issue of affordability
• Price to household income ratio 10-15 times
• Subsidised affordable housing flagrant breaches
  of terms of sale
• Public rental housing rents controlled, 4001
  price to rent ratio

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Mainland China Private Housing
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Mainland China Government Housing
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Office Market

• Major centres are Beijing and Shanghai but
  Guangzhou and other secondary cities (Tianjin,
  Suzhou, Hangzhou) also provide Grade A office
  accommodation
• Available for lease or strata title purchase
• Rents range from US35 psm per month in Shanghai
  to US7 psm per month in lesser cities

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LG Tower, Beijing
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Retail Market

• Very active market currently
• Several projects underway of 1m sq. metres GFA
  and above
• Frequently sold on strata title basis but market
  learning that this is not satisfactory in the
  longer term
• International brand tenants in major centres in
  Beijing, Shanghai, Guangzhou, Shenzhen, etc.

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Fortune Plaza, Beijing
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Market Prices and Yields

• Residential
• Luxury US1,500 per sq.m.
• Mass US750 per sq.m.
• Yield 8-9
• Office (Grade A) US2,500 per sq.m.
• Yield 8-9

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