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Property Market

Property Market . MAINLAND CHINA. Beijing and Shanghai. No Single Market . A series of markets within a market – primary, secondary and tertiary cities Limited quality product Absence of a secondary market Lack of transparency and consistency

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Property Market

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  1. Property Market MAINLAND CHINA

  2. Beijing and Shanghai

  3. No Single Market • A series of markets within a market – primary, secondary and tertiary cities • Limited quality product • Absence of a secondary market • Lack of transparency and consistency • Real efforts being made to wipe out corruption and speculation at official level • Still an emerging market

  4. No Single Market (continued) • Government tightening controls over land market – vast amounts of agricultural land already lost illegally to development • Growing foreign investor influence • Mainland China looks very much to Hong Kong and other international centres as examples for future policies

  5. Housing Provision • Over 40% of population live in urban areas – some 550 million people • Average living space increased from 4 sq.m. in early 1980’s to 22 sq. m. today • Housing reform in 1998 – move away from traditional allocation as part of employment to open market as main channel of provision • Commercial housing growth since 1998 averaged 35% per annum • Estimated 82% of allocated public housing has already been sold to workers/employees

  6. Structure of the Housing Market • Each city operates as a separate market • Commercial commodity housing – merged foreign and local markets • Issue of affordability • Price to household income ratio 10-15 times • Subsidised affordable housing – flagrant breaches of terms of sale • Public rental housing – rents controlled, 400:1 price to rent ratio

  7. O. $800 L. $500 M. $400 K. $500 N. $400 J. $1,000 P. $300 H. $2,000 F. $2,400 G. $2,200 E. $2,600 D. $2,800 B. $3,500 C. $2,800 I. $2,400 Q. $600 A. $4,000 R. $700 * Unit rate expressed in HK$ per square foot (gross floor area)

  8. Mainland China – Private Housing

  9. Mainland China – Government Housing

  10. Office Market • Major centres are Beijing and Shanghai but Guangzhou and other secondary cities (Tianjin, Suzhou, Hangzhou) also provide Grade A office accommodation • Available for lease or strata title purchase • Rents range from US$35 psm per month in Shanghai to US$7 psm per month in lesser cities

  11. LG Tower, Beijing

  12. Retail Market • Very active market currently • Several projects underway of 1m sq. metres GFA and above • Frequently sold on strata title basis but market learning that this is not satisfactory in the longer term • International brand tenants in major centres in Beijing, Shanghai, Guangzhou, Shenzhen, etc.

  13. Fortune Plaza, Beijing

  14. Market Prices and Yields • Residential • Luxury US$1,500 per sq.m. • Mass US$750 per sq.m. Yield 8-9% • Office (Grade A) US$2,500 per sq.m. Yield 8-9%

  15. Professional Property Services Limited Thank You!

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