Shanghai Economic Development

Transcription

1 Shanghai Economic Development High-end Residential Leasing Market Data Analysis & Shanghai Residential Market Housing Allowance Benchmark Study JRE 2013 Q1 Quarterly Report

2 Shanghai Economic Development High-end Residential Leasing Market Data Analysis & Shanghai Residential Market Housing Allowance Benchmark Study [China's Economic Trend] China is now in the key period of economic transition. Under the changing background of domestic and global surroundings, "steady increase" has become the main theme of economic development since Nowadays, the slowing increase of economy is affected by either short-term market fluctuation or middle and long term factors of increasing methods. So, it is vitally important to speed up to promote the transition of economic developing ways while the economy is increasing steadily under the issue of short-term policies. China's transition and transformation seems to achieve a historical key point and turning point now. Attention and cognition to China's economic market Ji Xiaolei, director and chief editor of China Economic Weekly, says that foreign enterprises should renew their knowledge to Chinese market. It is because, the first, China has changed its role in the global economic situation after 30 years' development. Second, China's opening towards outside has entered into a new stage. Third, there are less favorable policies on foreign investment. Forth, domestic market surroundings have great changes. Foreign enterprises receive strong challenges from domestic enterprises. Fifth, the cost of domestic manpower is rising, and the cost pressure of resource and environment becomes larger. This is also a new problem which multi-national corporations should face. "If foreign enterprises and MNCs want to have long-term and sustainable developments in China, they should recognize these five aspects of changes. Some new strategies which should taken by foreign enterprises and MNCs in China: 1. Pay attention to China s urbanization opportunities. Urbanization is a new increasing point in China s future economy. 2. Pay attention to the variety of China s market. China is vast in territory. The market is very big, on the other side, there are large gaps between East and West and City and Country. 3. Turn "Made in China into Developed in China. Manufacturing industry occupied the most parts of advantages among all the foreign enterprises in old days, now many foreign enterprises have set up their own developing centers in China. 4. Emphasize on localization. When we talked about the localization of foreign enterprises before, that used to mean the localization of employment. The localization here I mentioned is the cognition to China s market and local market. 5. Foreign investment should change its construction and patterns. 6. MNCs should change their business strategies and tactics. 7. Foreign enterprises should take strategy problem into account as social responsibility. 8. Foreign enterprises should lay down themselves and truly integrate into Chinese society to achieve a win-win cooperation.

3 [China s Residential Leasing Index] Residential Leasing and Selling Index of March 2013 City Index M to M(%) Y to Y(%) Index M to M(%) Y to Y(%) Beijing Shanghai Tianjin Chongqing Shenzhen Guangzhou Hangzhou Nanjing Wuhan Chengdu Qingdao Beijing Residential Leasing and Secondary Housing Selling Index Month Index M to M (%) Y to Y (%) Index M to M (%) Y to Y (%)

4 Shanghai Residential Leasing and Secondary Housing Selling Index Month Index M to M (%) Y to Y (%) Index M to M (%) Y to Y (%) Shanghai Residential Leasing and Secondary Housing Selling Index Month Index M to M (%) Y to Y (%) Index M to M (%) Y to Y (%)

5 [Shanghai High-end Residential Leasing Market Information] Steady needs in luxury residential market, rental of full decoration properties rose by nearly 10 percent After the issue of detailed implement of Five New Housing Regulations, various types of properties on trading market have large amounts of turnover, and the turnover circle has shortened greatly. Meanwhile, the supply of leasing market becomes tightening. Shanghai residential leasing index of March 2013 is 1392; it has risen by 7 points than last month, +0.50% on an M to M basis. The index of March has continued the uprising trend as last several months. Shanghai high-end residential rental has risen by 0.31%, the growth has shrunk by 0.14% than February. Landlords of downtown areas still keep a serious mind after the jumping of rental price. Some of them even withdrew their deals and turned to leasing market. Especially the rental price of those high-quality properties in good location has risen by 10%. Moreover, the recovering leasing requirements of foreign expats has also supported the turnover rate of luxury properties in downtown areas. Among them, rental of two-bedroom has increased by 0.52% and three-bedroom 0.58%. All eleven areas under monitoring have strong performance, while the rental of Jing an, Yangpu, Hongkou and Zhabei District has risen by 0.66%, 0.65%, 0.59% and 0.57% respectively. Downtown areas with higher increase rate are Jing an Temple, Zhenning Road and Xintiandi Areas, the rental growth of which is 0.66%, 0.51% and 0.47% respectively. Areas not included in downtown parts but has a high increase are Minhang JinHong Bridge and Zhabei Everbright City, their rental growth are 0.24% and 0.20%. Luxury market keeps a steady increasing trend, turnover structure has changed greatly According to market data analysis, properties with more than three bedrooms are favored by high-end tenants, especially the needs from expats family has great amounts of increase. With the continual uprising of rental price, middle-level white-collar of corporations and families without property purchasing plans will expand their leasing areas to surrounding areas. Properties along metro stations are their first choice, such as Dahua Area in Baoshan, Tangqiao Area in Pudong and Xinzhuang Area of Minhang, the rental of these areas all rises by 0.82%, 0.74% and 0.59%. Rental price of downtown areas didn t change a lot while comparing with the earlier stage. Because of the relatively higher rental, the main target of landlords is to rent out the properties in short time and reduce the loss brought from vacancy. For example, the rental price of Dapuqiao Area in Huangpu has risen by 0.29%, both 0.29% of growth can be seen in Tianmu Area of Zhabei and Changshou Area of Putuo. Shanghai Residential Leasing Index Office thought the leasing market would gradually enter into a stable period after experiencing the leasing trend of Spring Festival. But being affected indirectly by the new property regulations, the leasing market still shows a

6 high increase in March 2013, that is said those properties on sale, on rent and rented out will be thrown into secondary housing market and catch up the last bus of 20% personal tax avoidance. With the issue of ground rules of new property regulations, rental price might fall down relatively under the adequate supply of leasing properties. Luxury leasing market tends to be active, requirements of cultural facilities has enhanced Latest data from Shanghai Residential Leasing Market Research Dept. shows that the turnover rate of high-end properties with rental price above 10,000 RMB was 19.3% in Q3 2012, it increased by 4.5% than last quarter. Concentrated areas of these kinds of leasing properties include Changshou Areas of Putuo, Lianyang Area in Pudong, Gubei Area in Changning and so on. Their tenants are mainly people with high-end leasing requirements. Among this, September to November is the traditional season while high-end tenants get their lease expiry or change their properties; it will be the same according to JRE s forecast. This type of tenants can afford high rental and are less sensitive to price. So, the quality of property is the main reason which attracts them. But with the quality cognition of high-end tenants, they promote higher standard and personal comprehensive requirements on facilities, decoration, maintenance and service than ever, such as luxury decoration with fully equipped furniture, nice living accommodation and quiet place among noisy commercial centers. Tenants will also examine the room cleaning service and other individual services. They raise high-quality demands on surrounding environment, public facilities, cultural education and area attributes like SPA club, wine company, international bank, entertainment place, gym, swimming pool, tennis court, educational school and other facilities. These all become the bonus point of high-end customers during their five-star leasing life. [JRE Shanghai Residential Market Housing Allowance Benchmark Study] Methodology of Determining Housing Budget for Expats in China 1. Housing budgets that align with title/level and the family size of expatriate assignees. Most of the multi-national companies adopted this approach. 2. Housing budgets based on family size only. With the exception of the top number one and number two executives ranked in the local office, these expatriates receive housing budgets completely based on family size, i.e. single, couple, couples with children, etc. Most companies do set a cap on family size when establishing the housing budgets. 3. Housing budgets based on title/level only. Simply, that each expatriate is given a housing budget based on the position and title in the company. 4. Last but not least is the free hand budget. For this type of budget, expatriates get a full package including housing, salary, bonus etc. and then freely decide how much is spent for the housing. Expatriate Housing Allowance of Banking Industry in Shanghai (RMB/mth) Single Married Married Married Married

7 Expatriate Housing Allowance of Automotive Industry in Shanghai (RMB/mth) Single Married Married Married Married Expatriate Housing Allowance of Engineering Industry in Shanghai (RMB/mth) Single Married Married Married Married Expatriate Housing Allowance of Communication Industry in Shanghai (RMB/mth) Single Married Married Married Married [JRE. NOTES] What kind of community does expats prefer? Market demands show that expats from different countries have different leasing requirements. Such as a single from Germany, he would rather abandon money than space. Though being himself only, he would like to rent a house of square meters. While Americans pay attention to personal style and comprehensive comfort. Moreover, properties near subways are especially favored by expats, and they also need full and high-end facilities. It will be OK to expats with easy access to subways, airports, and five-star hotels. If there are more expats living in the community and form an international atmosphere, they will feel more comfortable. How to be satisfied by expats? You should know the standard furniture equipment of the property, such as a double-door refrigerator, a washing machine with drying function, a double electric and fuel stove, status of a dishwasher and a roaster, etc.