APPD Market Report Article

Beijing

February 28, 2022

1.0%

RMB 149

Growth
Slowing

Luxury apartment sales hit quarterly high unsurpassed since 2014

  • Luxury apartment sales reached a new quarterly high in 4Q21, after both demand and supply showed continuous strength throughout the year. A total of 1,529 luxury apartment units were sold, up 76.4% q-o-q – a quarterly high unachieved since 2014. The total annual sales volume of 3,705 units also surpassed the historical average.
  • In 4Q21, the central government sent positive signals to the market, cutting the reserve requirement ratio for a second consecutive quarter and slightly easing mortgage lending in the residential market. This also helped to drive up sales in the high-end market.

New supply surges 138% y-o-y as developers accelerate launches

  • Luxury apartment supply continued to remain strong in the quarter as developers accelerated new project launches to meet full-year sales targets. A total of 2,720 units were launched, increasing 24.1 % from 3Q21. Under positive liquidity policies from the central bank, developers were more willing to release new supply.
  • The second centralised land auction scheme of the year concluded in October, with just 17 land plots transacted. As such, government authorities had only planned to launch 12 plots for the final auction of 2021 and 10 lands were sold in December.

High-end housing prices and rents remain largely stable

  • Luxury apartment prices slightly decreased by 0.2% q-o-q on a like-for-like basis. This was largely due to developers unleashing year-end promotions in a bid to drive sales. However, capital values growth stayed on a positive trajectory, recording a 2.5% y-o-y increase.
  • Rents in the high-end leasing market remained stable, registering 0.1% q-o-q growth. Flat rents is common at this time of year as the fourth quarter is traditionally an off-season for the rental market; both domestic and foreign tenants are typically less likely to commit to moving plans at year-end.

Outlook: Strong demand for favorable projects set to continue

  • Continued recovery plus easing in market liquidity is expected to further strengthen market confidence. Sales are predicted to remain healthy for well-appointed projects in favourable locations. Sustained demand may lead to a moderate increase in prices.
  • Future high-end residential supply may become even more scarce due to strict rules imposed for centralised land sales auctions. Less high-end residential land would further support modest primary price growth, while sizeable demand could also transfer to the secondary market, supporting a similar trend for secondary prices.

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

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