| Current rental market in Beijing... |
| Rent Market Analysis Report of High-End Apartment in BeijingI. Rent market trend of high-end apartments in Beijing, November |
I. Rent market trend of high-end apartments in Beijing
a. Rent of high-end apartments in Beijing showed a downward trend
The average rent of high-end apartments dropped the first time of this year in November. This is typically reflected by rent of high-end apartments clustered with foreign staffs and enterprise administrators. Rent in those areas dropped by 10% to 20%, even 30% in some regions.
b. Reasons for rent drop of high-end apartments in Beijing
Rent of high-end apartments dropped sharply in November for the following reasons
a)
After research of areas around Chaoyang Park, CBD and Lido where rent dropped the most sharply, we got to know that properties for rent in the market proliferated because the sales price drop made some landlords who planned to sell their houses change their idea. They would rather rent their houses instead of selling them.
b)
Due to the global economic crisis, many companies dismissed part of staffs or lowered salaries. Staffs felt great uncertain about their future income. Under this condition, people who planned to rent houses decreased their rent budget.
c)
Coming of the traditionally weak season at the end of the year together with other factors led directly to the rent drop of properties in these areas.
II.
Market analysis of high-end properties rent in typical regions
a. Areas around Chaoyang Park
Sale price drop of properties made most of landlords who planned to sell their houses change their ideas. They would rather rent their houses instead of selling them. This led to the increase of properties for rent on the market.
a)
Reason analysis
Price of second-hand properties has been declining from the beginning of 2008. Many landlords changed their idea of selling properties to rent in the hope of easing their losses by rent due to the gloomy sales market prospect. This led to the increase of properties on rent market. At the same time, less people planned to change houses at the end of the year. Customers on rent market declined much compared with September and October. The unbalanced rent market resulted in a higher vacancy rate of properties. Under this circumstance, landlords had to lower their rent to attract customers so as to lower the vacancy rate and reduce their losses. As a result, rent of properties dropped.
b)
Case of high-end apartment rent around Chaoyang Park
Property Name | Bedroom | Area（㎡） | Average Rent September to October | Average Rent November to December | Fluctuation Rate | Park Avenue | 2Br | 140 | ￥15000 | ￥12000 | -20% | 3 Br | 256 | ￥30000 | ￥25000 | -16% | 4 Br | 370 | ￥47000 | ￥40000 | -15% | Palm Spring | 2 Br | 135 | ￥14000 | ￥11000 | -21% | 3 Br | 220 | ￥35000 | ￥30000 | -14% | 4 Br | 370 | ￥50000 | ￥41000 | -18% |
b. CBD area
Many companies dismissed staffs or lowered salaries due to the effect of global financial crisis
a)
Reason analysis
People who rented in CBD area in November were apparently less than October. Affected by the global and domestic economic trend at present, foreign enterprises in World Trade, CBD and some neighboring areas dismissed some of staffs or lowered their salaries. Some foreign enterprises even retracted their overseas administrators back to home country or changed their rent subsidies from wholly company paid to half company paid. Under this condition, many foreign staffs or golden collars gave up the apartment they were living and shifted to a cheaper apartment. This led directly to the great loss of customers in this area and the increase of apartment vacancy rate. To rent their house out, landlords had no other choices but to lower their rent.
b) Case of high-end apartment rent around CBD
Property Name | Bedroom | Area（㎡） | Average Rent September to October | Average Rent November to December | Fluctuation Rate | Central Park | 2Br | 135 | ￥15000 | ￥13000 | -13% | 3Br | 190 | ￥25000 | ￥22000 | -12% | 4Br | 245 | ￥35000 | ￥30000 | -14% | Global Trade Mansion | 2Br | 176 | ￥16000 | ￥12000 | -25% | 3Br | 180 | ￥18000 | ￥13000 | -27% | 4Br | 256 | ￥23000 | ￥17000 | -26% |
c. Lido area
Coming to the end, rent market of high-end apartments in Beijing shifted to the weak season
a) Reason analysis
Rent market of high-end apartments would turn to the weak season at the end of every year. Coming to this season, apartments for rent were comparatively more than usual. In addition, the essential clients for high-end apartments rent market, foreign executives, would go back to headquarters to make work reports, spend festivals or even be transferred to other positions. As a result, some apartments which have no one to take over will hang in the market. The decrease number of people who rent high-end apartments resulted in the excessive offers over demand. Rent of high-end properties dropped accordingly.
b)
Case of high-end apartment rent around Lido area
Property Name | Bedroom | Area（㎡） | Average Rent September to October | Average Rent November to December | Fluctuation Rate | Upper East Side | 2Br | 143 | ￥13000 | ￥10000 | -23% | 3Br | 207 | ￥22000 | ￥16000 | -27% | 4Br | 260 | ￥24000 | ￥18000 | -25% | Richmond Park | 2Br | 180 | ￥16000 | ￥12000 | -25% | 3Br | 217 | ￥24000 | ￥19000 | -20% | 3Br | 340 | ￥38000 | ￥29000 | -23% |
III. Summary of high-end apartment rent market
In conclusion, coming to the fourth season, demand of rent market will gradually weaken at the end of the year. Besides, income of people who rent houses is uncertain due to the global economic crisis while offers in rent market are plenty more. All these factors lead to the rent drop of high-end apartment rent market in November. However, rent drop of different regions differentiates from one another for different conditions of regional market. We can see from examples mentioned above that rent of high-end apartment in Lido area dropped the most apparently with average drop of 23.8%.
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