APPD Market Report Article

Beijing

May 31, 2022

1.0%

RMB 149

Growth
Slowing

Luxury apartment sales hit quarterly high, unsurpassed since 2013

  • Luxury apartment sales have slightly dropped compared to 4Q21, largely because developers launched a series of discounts last quarter to meet annual sales targets. 1Q is traditionally off-season in the primary market. However, a total of 848 luxury apartment units were sold, down 45.0% q-o-q but up 80.0% y-o-y; a quarterly high unachieved since 2013.
  • In 1Q22, monetary easing from the People’s Bank of China has provided a positive message to the market, reassuring healthy development of the domestic real estate market. Loosened policies were witnessed in many cities at a national level, with localised policies to support the residential market. A high number of sales in the first quarter was witnessed, reflecting a stable market.

New supply continues to remain at high level

  • Luxury apartment supply continued to remain strong and stable in the quarter as developers finished laying out annual sales strategies and started to launch new units. A total of 2,667 units were launched, which is the highest first quarter number ever recorded. Under easing monetary policies and continued positive support by the government, developer confidence was up.
  • The first centralised land auction scheme was finalised early in February, with 17 land plots transacted in the quarter. Most of these lands were taken by state-owned enterprises, signalling a recovery in the land market. Developers have accelerated launching new projects while the government has also increased the pace of its pre-sales license approvals.

High-end housing prices and rents remain largely stable

  • Luxury apartment prices slightly decreased by 0.4% q-o-q on a like-for-like basis. This was largely due to market uncertainties at the start of the year when developers were unlikely to increase prices. However, capital value growth stayed on a growth trajectory, recording a 0.4% y-o-y increase.
  • Rents in the high-end leasing market remained largely stable, registering no changes in the quarter. Flat rents are common in the first quarter due to low leasing activities during the spring festival holiday and, especially, the resurgence of COVID-19 cases in the quarter.

Outlook: Strong demand for favourable projects set to continue

  • Monetary easing continues to provide strong positive signals to the residential market, further strengthening market sentiment. Sales are predicted to remain at a healthy level for high-end projects in prime locations. Sales prices will continue to be stable with sizeable demand.
  • High-end residential units continue to be scarce due to a lack of high-end lands and a tight control on premium rates. The drop in the number of land transactions in 4Q21 may slow down the high-end supply later this year.

Note: Beijing Residential refers to Beijing's overall luxury and high-end residential market.

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