Tag Archives: chinese
Residential property market in China picked up in third quarter of 2015
The residential property market in mainland China picked up gradually in the third quarter of 2015 amid a series of favourable policies such as cuts in interest rates, relaxed restrictions on foreign purchase and an easing of housing provident fund loans. Luxury home prices rose further in first tier cities including Beijing, Shanghai and Guangzhou, where the markets continued to clear inventories, according to the latest Greater China property market report from international real estate firm Knight Frank. It says that the favourable policies will continue to benefit first tier cites, but are less effective in lower tier cities with high inventory levels and weak demand. ‘With Chinese and Hong Kong’s stock market volatility and concerns over an interest-rate hike in the US, Hong Kong’s luxury home buyers tended to wait and see, while secondary landlords were also firm on asking prices, resulting in declines in home sales, rents and prices in the luxury market,’ it explains. It points out that more residential properties are scheduled to complete next year, which will impose further pressure on luxury home rents and prices. In Taipei, amid the government’s regulatory measures, luxury home transactions declined. Landlords became more inclined to hold and rent out their residential assets, leading to increased leasing supply. Nevertheless, luxury residential rents and prices remained stable during the third quarter and the outlook is one of polarisation. The report says the market will be affected by cooling measures, the launch of a combined property and land tax and market expectations. ‘Premium residences in the downtown area will have prices remaining firm, while non-prime luxury homes will experience downward pressure on prices,’ it adds. For the commercial market, the report says that Chinese stock market volatility coupled with growing fears of a slowdown in domestic economic growth, led to a slower pace of corporate expansion, hence weighting on Grade-A office rents in major mainland cities. On the other hand, the People's Bank of China has actively cut interest rates and the reserve requirement ratio since the beginning of this year, aiming to release liquidity in the financial system and ultimately to boost the economy. Grade-A offices prices in Beijing, Shanghai and Guangzhou rose as investing in such properties became increasingly attractive in such a low interest rate environment. With the completion of more Grade-A office buildings in the cities, rents are expected to face further downward pressure in the future. Hong Kong's Grade-A office market recorded strong performance. With sustained office demand from mainland financial institutions but a lack of supply in core business areas, the vacancy rate fell sharply and companies had to rent at higher rental costs. Due to extremely low availability and high rents in core areas, some firms shifted to more cost effective offices in non-core areas where supply was abundant. This trend is likely to continue next year, the report says, with further growth in office rents in core areas. In Taipei, over 80,000 square meters of Grade-A… Continue reading
UK commercial property market set to see record breaking year as confidence rises
Strong investor confidence is set to propel the UK’s commercial property market into a record breaking years with deal volumes at the end of the third quarter already over £50 billion. If, as anticipated, volumes in the fourth quarter of 2015 follow the patterns observed in the final quarters of 2013 and 2014, investment in the UK commercial market this year will break the £70 billion barrier for the first time. According to international real estate advisor Savills it is the strong confidence in the market that is the driving force behind the growth in activity. Its latest report says that despite ongoing uncertainty over Greece’s position in the Eurozone and a slowdown in the Chinese economy, UK property as an asset class continues to outperform investor expectations. Average prime yields have remained at 4.65% for the second successive month, however resurgent retail activity and strong UK institutional interest in south east offices could exert downward pressure on yields in these sectors, the report warns. ‘Last year 59% of investment activity in UK property took place outside London, a trend that is set to continue as investors seek the value afforded by the rental growth prospects in supply constrained regional markets, alongside the opportunity to build scale by acquiring portfolios,’ said Kevin Mofid, research director at Savills . ‘However, regional markets can be more susceptible to Government policy changes than the capital. Investors should therefore consider the potential impact that the extension of commercial to residential permitted development rights could have on rental growth and vacancy rates in regional office and industrial markets,’ he explained. ‘Nonetheless, given that investors currently place UK property head and shoulders above other asset classes, we don’t envisage that these measures will materially affect investment activity going into 2016,’ he added. A separate report from Savills says that non-domestic real estate investment outside of London will reach a record high by the end of 2015 with some £10.5 billion invested in real estate outside the capital by international investors in the first eight months of 2015. Savills predicts that this will rise to £14 billion by the end of 2015, the highest volume since it started collecting data in 2000, and nearly half of all the non-domestic investment in the UK as a whole. In the 12 months to August 2015, portfolio purchases accounted for the majority, 64%, of investments, due to the preference of investors for larger lots which are less common outside of London. Scotland and the South East proved to be the most popular regions, each attracting a 7% share of investment, with the North West and West Midlands in joint second place attracting a 5% share each due to the strong rental growth projections for the Manchester and Birmingham office markets, as well as the comparatively high yields on offer. The most popular sector for investment is retail and leisure, accounting for 57% of investment, driven by several… Continue reading
Rental values in prime central London down to lowest level for a year
Annual rental growth in prime central London fell to 2.4% in September, which was the lowest level it has been since September last year, the latest data shows. The report from international real estate firm Knight Frank also shows that the number of tenancies agreed in the three months to August fell 5.9% versus 2014 while prime gross rental yields remained at 2.96%. The slowdown came against the backdrop of jittery financial markets, with nerves over the state of the Chinese economy spreading to commodity and mining stocks, compounded by declines among carmakers, according to Tom Bill, head of London residential research at Knight Frank. ‘This current overriding mood of uncertainty means companies are more hesitant about recruiting and are more conservative with relocation budgets for senior executives, which has dampened demand in the prime central London lettings market,’ he said. ‘As a result, the number of tenancies agreed in the three months to August fell 5.9% compared to the previous year and the number of viewings declined 10.2%. Such declines suggest the trend for falling rental value growth will persist in the short term,’ he added. He pointed out that the trend is less marked in both lower and higher price brackets. ‘Demand among younger professionals remains strong while demand at the super prime level of £5,000 per week and above has been buoyed by the fact tenants have moved across from the sales market due to last December’s stamp duty increase,’ explained Bill. Continue reading
