Observations from the ground: high-end residential in Qingdao – shifting from discretionary to upgrade buyers
August 28, 2011 / By Amy Pan
For REIS this quarter, I visited Qingdao, an important trading port known as the home of well-known Chinese brands – Haier, Tsingtao Brewery and Hisense. The following is excerpted from reports our REIS subscribers received several weeks ago.
As a coastal city, luxury residential in Qingdao has concentrated on the oceanfront near the CBD. The most prized assets are found between May 4th (Wusi) Square and Shilaoren (“Old Stone Man”). At this point most prime parcels have either been developed or spoken for and luxury development has trended either inland or further from the CBD along the coast.
The rebound in the prices of luxury residential from the 2008/2009 doldrums has been fairly dramatic, with large ocean view apartments now going for more than US $1 million! However the Home Purchase Restrictions (HPR) implemented in China generally, and Qingdao specifically, have had a big impact on this segment of the market and sales have been very sluggish. Discretionary buyers – local high net worth, holiday home buyers, investors, etc – are disproportionately impacted by the HPR compared to owner-occupiers like ‘upgraders’.
In the current restrictive policy environment, Qingdao’s super luxury ocean view market seems saturated at current price levels. Our take – both land availability and demand trends in the luxury residential sector are shifting in favor of upgrade buyers – and this trend of product diversification towards more ‘affordable luxury’ residential offerings should be seen as a welcome development. However, we do expect developers’ battle for upgrade buyers to intensify which could have price implications. We look forward to reporting back on this developing situation for REIS subscribers in the coming quarters.
For more detailed analysis on Qingdao High-End Residential Sector, check out the China Real Estate Intelligence Service report for Qingdao 2Q11.
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