APPD Market Report Article


February 28, 2023

Silvia Zeng, Head of Research, South China


RMB 91.9


Housing demand remains sluggish in the quarter

  • Since November, a large wave of COVID-19 cases arose in Guangzhou. Several districts went under lockdown, which negatively impacted residents’ mobility and the number of house tours done in the quarter. Therefore, transactions in both primary and secondary markets dropped in 4Q22.
  • Buyers in the high-end market continued to demonstrate a preference for prime assets. However, because of the COVID-19 situation and market uncertainty, these buyers have continued to adopt a wait-and-see attitude.

Several new projects and phases enter the market in 4Q22

  • Several new high-end buildings and phases entered the market in the quarter, adding 2,128 units to supply. Notable among them was the latest phase of Pinyue Mansion in Pazhou, which was snapped up shortly after launching in December.
  • Eight projects were completed in the quarter, adding 1,989 units to the total stock of Guangzhou’s high-end residential market.

Some developers lower prices to attract hesitant buyers

  • For the primary market, developers with less competitive buildings lowered prices, hoping to obtain cash flow for their year-end targets, whereas prices of high-quality buildings in prime locations remained stable. The overall primary high-end capital value (CV) decreased 0.7% citywide on a like-for-like basis. For the secondary market, due to a lack of assertive buyers, CV decreased 1.9% q-o-q.
  • Leasing activity stagnated due to the plunge in leasing demand caused by the large-scale lockdown. Many tenancies ended without new contract replacements as the year end approached. Landlords continued to keep a conservative attitude, either offering little negotiation on rents or choosing to wait for better tenants in the new year. Rents decreased by 1.1% q-o-q in the quarter.

Outlook: Overall market to take time to recover

  • The central government issued a set of policies targeting stabilising and reviving the domestic property market in late-2022, including the “three-arrows” and the “16-point plan”. In addition, with the gradual easing of COVID-19 controls since December, domestic real estate developers will likely see an improving cash flow.
  • Regarding primary and secondary CV, the housing market will likely regain momentum later in 2023, depending on the recovery of the economy and the overall domestic demand. Lifting COVID-19 restrictions for both nationwide and international travel should bring about an increase in mobility and thus, higher leasing demand. Hence, the market is expected to improve compared to 2022.

Note: Guangzhou Residential refers to Guangzhou's luxury residential market.

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