Apartment rents and prices increase in beijing
Apartment rents and prices both increased in Beijing in the third quarter of the year, according to new figures.
The latest report from Jones Lang Lasalle shows that rental rates for serviced apartments rose by 2.8 per cent from the second quarter of the year. High-end apartment sales prices also rebounded, climbing by 7.4 per cent from the first three months of the year.
Although it was not the traditional peak season for the leasing market, the third quarter continued to see strong demand, adds JLL. In some prime areas such as the CBD and the Third Embassy area, available housing was limited. Influenced by global economic uncertainty, a small number of foreign companies and embassies reduced their employee housing allowance budgets, leading to some relocations in the cases of rental increases. However, for most MNCs, rental increases of 5-10% were acceptable.
Following the transaction rebound in 2Q12, high-end apartment sales continued to perform well in the reviewed quarter. The number of units sold in 3Q12 was recorded at 3,398 units, an increase of 9.9% q o q. The main demand drivers were cash rich buyers who purchased high-end apartments to upgrade living conditions or for the purposes of their children's education.
After eight successive quarters with no new supply, East Gate Plaza was re-launched in 3Q12 following refurbishment, bringing a total of 154 serviced apartment units to the leasing market. Two completely new and ten new phases of existing high-end apartment projects entered the sales market in the third quarter, bringing a total of 2,973 units to the market and representing an increase of 45% q-o-q.
Despite the new supply, the average vacancy rate for serviced apartments did not significantly increase, rising by 1.4 percentage points to 6.6% q-o-q. This was mainly due to strong demand seen this quarter which enabled landlords of serviced apartments to raise rents by 2.8% q-o-q and 9.3% y-o-y to RMB 205.4 per sqm per month (based on GFA).
Inspired by the rebound in the number of units sold in 2Q12 as well as the good performance in the third quarter, developers of some projects stopped cutting prices and raised asking prices or reduced incentives offered to potential buyers. This resulted in a 7.4% q-o-q increase in the average sales price of high-end apartments to RMB 40,994 per sqm.
"Looking ahead to the final quarter, The Imperial Mansion, Beijing - Marriott Executive Apartments and Global Trade Centre Serviced Apartment are expected to be completed, offering a combined total of 430 units," concludes the report. "Robust demand should be beneficial to the new projects, and the average rent should experience an increase similar to that of 2011. As the traditional low season, the fourth quarter is not expected to follow the robust trend in transaction volume. However, it is likely that the number of high-end apartments sold in 2012 as a whole will outperform that of 2011. In terms of transaction price, it is expected that the average transaction price will hit end-2011 levels by the end of this year."