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  • Dec 19, 2014
  • Updated: 12:00am

Sharp rise in Beijing luxury villas to put squeeze on rents

PUBLISHED : Wednesday, 31 March, 2004, 12:00am
UPDATED : Wednesday, 31 March, 2004, 12:00am
 

The supply of luxury villas in Beijing is expected to rise sharply this year, possibly leading to a decline in rentals, according to property consultants FPDSavills.


The company forecasts that another 1,900 new luxury villas will go on the market this year, representing a 140 per cent increase year on year and 12.4 per cent of the existing stock of top-end villas.


Because of the sudden increase in supply, the rental value of high-end villas would ease compared with the rising trend seen last year, FPDSavills said. The average rent for top-end villas in the fourth quarter of last year was US$17.76 per square metre a month (excluding management fees), up 1.3 per cent year on year.


Villa rents were bolstered by rising demand, particularly from the telecommunications, petroleum, motor vehicle and electronics industries, in the aftermath of the Sars outbreak.


FPDSavills said the increase in villa supply stemmed from the large number of land transactions that followed the introduction of the new land policy in July 2002.


'New supply in the pipeline over the next two years is expected to be even higher,' the property consultancy said.


It said the central and local government had issued a series of real estate-related policies last year aimed at restricting bank loans to developers, and stopping approvals for new villa developments.


As a result, most developers had accelerated their construction programmes in the hope of completing their projects before the policies were enforced.


The Ministry of Land and Resources stopped approving new land for villa projects in February last year, while the People's Bank of China issued a policy to increase restrictions on bank loans to developers, construction companies and home-buyers in order to exert better control over excessively high investment growth and increasing volumes of unsold space.


FPDSavills expects 5,400 lowerquality flats to be completed this year.


Average monthly rents for luxury apartments were US$23.2 per square metre (excluding management fees) at the end of last year, a fall of 1.3 per cent year on year. But the consultants said the localisation of multinational corporations had resulted in lower housing allowances for expatriates, leading to an increased demand for cheaper housing.


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