2006 Serviced Apartment Market Analysis Report

2006 Serviced Apartment Market Analysis Report

——Colliers International

Serviced apartments and high-end apartments seem to be the "nunchucks" of the Beijing apartment market , either one waxes and wanes, or the two forces merge, but in 2007 the former seems to have the upper hand in both internal and external situations.

The once "depressed" Beijing serviced apartments ushered in their own spring at the end of 2006. Looking forward to 2007, it is expected to become the hot spot that attracts the most attention. Because the benefits of the 2008 Beijing Olympic Games will further promote people's market demand for this type of product.

The demand for serviced apartments is booming

Before 2006, the share of serviced apartments in Beijing’s high-end apartment market had always been very small. In 2006, the "Six National Regulations" and the "New Policy of Nine Ministries and Commissions" proposed macro-control policies of "limiting size and height" for the real estate market, causing some investors to shift their investment focus from high-end apartments to serviced apartments. Since the end of 2006, the investment boom in serviced apartments has gradually emerged and is expected to continue in 2007.

In the fourth quarter of 2006 alone, in the Beijing serviced apartment market, Ascott International invested 302 million in the Somerset Zhongguancun serviced apartment purchased from Beijing Ocean Real Estate and officially opened, as well as Shanghai Commercial Real Estate Group Home Furnishings Jia spent nearly 2 billion yuan to acquire the Mingcheng International Building located in the East Second Ring Road of Beijing. In the future, it will team up with Marriott Hotel Management Group to build the project into a super five-star hotel and serviced apartments.

According to statistics, in the fourth quarter of 2006, the rent of serviced apartments in Beijing continued to rise, reaching 208.86 yuan/square meter per month (including property management fees), and the overall vacancy rate was 15.48%. , a decrease of 3 percentage points compared with the previous quarter. It is expected that the Beijing serviced apartment market will continue to see an upward trend in rents in 2007.

The biggest reason why serviced apartments will be favored by investors in 2007 is that they absorb the service functions and management models of star-rated hotels, as well as the characteristics of office buildings in the information age, integrating residences, hotels, It integrates multiple functions such as a clubhouse into one, and has two functions: "self-use" and "investment". Due to the influence of policy factors and the good expectations for demand for the 2008 Olympic Games, serviced apartments will become increasingly favored by investors in 2007.

It is expected that the number of international people accompanying the 2008 Olympic Games will exceed 150,000, nearly half of whom are from developed countries and regions. In response to the quality of life and consumption needs of these customer groups, the rental market for high-end serviced apartments will continue to be booming from 2007 to 2008, and rents will also show a substantial growth trend. Among the many serviced apartments in Beijing, high-end serviced apartments with convenient transportation, complete supporting facilities, efficient business support, advanced communication facilities, international services and 24-hour security inspections will become a hot spot in the market. project.

Figure 1: Beijing serviced apartment supply, demand and rent trend chart

The supply of high-end apartments has dropped sharply, and the unit sizes have become polarized

In order to rationally adjust the housing structure, The government introduced the “70%·90m2” policy in 2006. Since the implementation of the policy has a certain lag, the "70%·90m2" policy will have little impact on the product supply structure in 2006. Projects approved in 2006 will be centralized in supply in 2007. It is expected that after October 2007, the Beijing market will see a peak supply of small apartments. Coupled with the government's control over the land for high-end apartments, it is expected that the number of high-end apartments will shrink sharply in 2007, with a decline of approximately 60% from the 5,200 units supplied in 2006.

In 2007, the reduction in the number of high-end apartments will not be able to meet the demand of high-end home buyers in the market. It can be predicted that the price of high-end apartments will continue to rise in 2007. From the perspective of pricing strategies, developers of high-end apartments will not suddenly raise prices in 2007, but will make gentle price adjustments as the market changes.

In addition, with the deepening implementation of the "70%·90m2" policy, the arc-shaped structures of high-end apartments will also become polarized in 2007, that is, small apartments below 90 square meters and 150 square meters. The above-mentioned large-scale apartments are increasing at the same time.

The reason is that the large apartment projects that passed the test in 2006 will gradually surface in 2007, and combined with the existing stock of large apartments, the proportion of large apartments in the high-end apartment market will not decrease in 2007, while those below 90 square meters The increase in the number of high-end apartments is directly related to the implementation of the “70%·90m2” policy. Therefore, in 2007, the number of medium-sized high-end apartments with an area of ??120 to 140 square meters will become less and less.

The introduction of "Detailed Rules on Export Restrictions" boosted the sales prospects of high-end apartments

Under the impact of the "Restrictions on Exports" in 2006, a large number of people had already selected houses and even completed online subscriptions. People from Hong Kong, Macao and Taiwan, foreigners, and overseas Chinese have suspended house purchase procedures. In September 2006 alone, the number of foreign sales in Beijing's high-end residential market dropped sharply by nearly 60%, which also led to a sharp decline in the number of foreigners in the customer base of high-end apartments throughout 2006.

On February 2, 2007, the detailed rules for the purchase of commercial housing in Beijing by foreign investors were officially released, stipulating that overseas individuals, residents of Hong Kong, Macao and Taiwan, and overseas Chinese who have worked and studied in the country for more than one year can apply for the "Overseas Individuals in the Mainland" Proof of Residence Status" to purchase a commercial house. It is understood that foreigners can define their residence time based on the time of entry with their passports, which actually relaxes the one-year residence requirement.

The reason why the sales progress of high-end apartments has slowed down in 2006 is that foreigners, who account for about 1/3 of the buyers of high-end apartments, are unable to purchase real estate under the influence of the "foreign restriction order". The introduction of the "external restrictions" means the lifting of restrictions on foreigners purchasing houses in Beijing, which will greatly promote the sales progress of newly launched high-end apartments and existing high-end apartments in 2007. High-end projects in the CBD area, Lufthansa sector and Chaoyang Park area, such as Metro International, Oceanwide International, Galaxy Bay and other projects, will become overseas projects in 2007 due to their superior geographical location, comfortable living environment and convenient living facilities. Popular items purchased by people.

The decline in rental prices has slowed

From the current market perspective, Beijing’s high-end apartment rental market prices have been on a downward trend. In the fourth quarter of 2006, Beijing's luxury housing market entered a trough in demand. At the same time, the concentrated entry of new projects into the market and the Beijing Municipal Taxation Bureau’s implementation of the land value-added tax policy on second-hand housing have caused some second-hand high-end apartments to shift from the sales market to long-term investment. Therefore, the overall rental prices of mid- to high-end apartments in Beijing have shown a downward trend. In the fourth quarter of 2006, the average transaction price of Beijing's mid-to-high-end rental market was 104.43 yuan/square meter per month (including property management fees), which was a decrease compared with the third quarter of 2006.

Although various policies introduced at the macro level have put great pressure on the high-end apartment sales market, with the gradual release of the effects of China’s accession to the WTO and the recovery of the global economy, Beijing will inevitably attract many foreign-funded companies to come. The development of Jingmou will bring more international customers, which will inevitably drive the development of Beijing's apartment rental market and the transaction market will pick up. It is expected that Beijing's high-end apartment rental market will heat up slightly in 2007, and its rent decline will slow down.

In addition, in 2007, in addition to the stable occupancy rate and rent level of high-end apartments in the CBD area, the rental prices of high-end apartments in Financial Street, Zhongguancun, and Asia-Olympic areas will also increase.

As the first choice for international financial giants to enter China, and the gathering place for domestic financial industries, communications industries and listed companies, Financial Street has laid a stable source of customers for the development of the rental market of high-end apartments in the area. With the support of stable customer sources, the rental decline of high-end apartments in the Financial Street area is expected to stop falling and rebound in 2007.

Although the market supply of high-end apartments in Zhongguancun is not large, the consumption power of residential buildings in the region is very large, and the demand for high-end apartments has always been in short supply. Therefore, the scarcity of high-end apartments in this area will drive up rents in 2007.

In order to successfully hold the 2008 Olympic Games, the government invested 180 billion yuan in new municipal facilities around the Olympic venues, which greatly improved the living environment in the Asian and Olympic areas. In 2007, with the improvement of the living environment and living atmosphere in the Asia-Olympic region, the rental market of high-end apartments in the Asia-Olympic sector will change the phenomenon of slight rent decline in 2006.