Sharp rise in Beijing luxury villas to put squeeze on rents

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.