Beijing Grade A Office Market

• Beijing's Grade A office net take-up fell 51 per cent in the first quarter to 140,000 sqm as market activity cooled after a red hot second half in 2009. Nevertheless, take-up was still up 50 per cent compared with the same period last year.
• No new office projects were released onto the market in the first quarter as a number of developers postponed launch dates.
• Citywide vacancy rate fell 1.5 percentage points in the first quarter to 18.1 per cent.
• Effective Grade A office rents increased for a second consecutive quarter to an average ofRMB157.8 per sqm per month, up 3.4 per cent in the first quarter.
• Plans for the Beijing CBD eastern expansion are moving forward. A recent announcement indicated that a new landmark building will be constructed which will tower over the city at a height of 400 meters. The structure will be the city's new tallest building replacing the China World Trade Center 3.

Beijing Retail Market

• Beijing retail sales rose to RMB96.8 billion in the first two months of 2010, up 15.1 per cent year-on-year, 1.9 percentage points slower than the same period last year.
• Three new mid to high-end retail projects were launched onto the market in the first quarter, adding 222,000 sqm of new supply.
• Average first floor prime shopping mall rents rose 1.8 per cent in the first quarter to RMB732.8 per sqm per month.
• Citywide prime shopping mall occupancy rates declined 0.6 of a percentage point to 84.4 per cent.
• Approximately 30 per cent of new supply expected in 2010 will be located in emerging retail districts outside the city's fourth ring road.

Beijing Residential Leasing Market

• No new serviced apartments were launched onto the market in the first quarter. Two previously lease only projects were placed onto the sales market, reducing the total stock of serviced apartments in the market.
• High-end villa and Grade 'A' apartment rents recorded increases in the first quarter of 0.4 per cent and 0.2 per cent to RMB116.7 and RMB95.1 per sqm per month respectively in the first quarter. Serviced apartment rents fell by 0.7 per cent to RMB151.5 per sqm per month.
• Serviced apartment, high-end villa, and Grade 'A' apartment occupancy rates all recorded an increase in the first quarter rising 1.4, 0.9, 1.1 percentage points respectively.
• Demand for high-end residential accommodation continues to show signs of improvement after a sluggish 2009. Market indicators are expected to continue to improve throughout the year.

Beijing Residential Sales Market

• A number of policies were introduced by the central government in the first quarter designed to cool down the rapid rise in house prices.
• Both the overall and the high-end residential sales markets saw drastically reduced supply and transaction volumes in the first quarter, while average transaction prices continued their rapid growth.
• Average Grade 'A' apartment and high-end villa transaction prices rose 15.3 and 13.1 per cent in the first quarter to RMB43,800 and RMB33,500 per sqm respectively.
• Prices are unlikely to experience a correction before the second half of the year. A potential fall in transaction volumes and government restrictions may incentivize developers to lower prices, however, prime projects in central locations are expected to maintain their value as a result of their scarcity in the market and limited competition from future supply.

Beijing Sales & Investment Market

• First hand strata transaction volumes in the office, retail and high-end residential sectors all recorded a fall in the first quarter.
• The average transaction price of Grade 'A' office, high-end villa and high-end apartments increased by 2.5, 13.1 and 15.3 per cent respectively in the first quarter.
• En bloc transaction values fell by 60 per cent in the first quarter to RMB4.36 billion, while the total transaction volume stood at 179,830 sqm.
• Land transaction values surged to RMB48.96 billion, up 112.9 per cent from RMB23 billion in the first quarter of 2009.

Information provided by:
Savills Research & Consultancy

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