1. home and garden
2. bed and bath
3. bedroom

Savills World Research
Shanghai
Briefing
Residential sales
May 2015
Image: Joffre Classic, Changning
SUMMARY
New policies supported buyer sentiment, leading to Shanghai’s residential sales market
picking up momentum after the Spring Festival holiday.
 ­New commodity residential supply fell
53.3% in Q1/2015 to 1.8 million sq m.
­ ­First-hand commodity residential

transaction volumes fell 44% in Q1/2015,
totalling 2.0 million sq m, primarily as a
result of seasonal fluctuation. Transaction
prices remained firm in the first quarter,
averaging RMB28,500 per sq m.
 ­First-hand, high-end apartment supply
fell 61.2% quarter-on-quarter (QoQ) to
66,500 sq m, with only one new high-end
project and one new phase of an existing
project launched onto the market.
 ­First-hand, high-end apartment
transaction volumes fell 47.6% QoQ to
158,400 sq m.
 ­First-hand, high-end apartment
steps to support the market. Further
supportive policies are expected to be
announced, such as an interest rate cut
and tax reductions.
­ ­Eleven residential land plots were

transacted in Q1/2015, totalling 918,900
sq m of buildable area, compared to
3.7 million sq m in Q4/2014. Average
premium over the reserve price fell to
24.2%.
“Developers continue to focus
transaction prices continued to see a
moderate increase of 1.9% on an index
basis in Q1/2015, to an average of
RMB66,100 per sq m.
(AV) reached RMB14,800 per sq m in
Q1/2015.
on leading cities in terms of
new land acquisitions due to
their mature markets, steady
end-use demand and business
environments.” James Macdonald,
 ­Short-term market prospects have
Savills Research
 ­Average accommodation values
improved as the government is taking
savills.com.cn/research
01
Briefing | Shanghai residential sales
May 2015
Market overview
Although China residential sales
volumes roared back to life at the
end of 2014, the market proved
quiet again at the beginning of 2015,
primarily due to seasonal factors.
The central government sent clear
supportive signals during the NPC
& CPPCC (annual plenary session
of the National People's Congress
GRAPH 1
Base lending rate
6 mth to 1 yr
8.0%
Additionally, many local governments
announced relaxations in housing
provident fund (HPF) policies while
Shanghai began offering more HPF
mortgages on 15 April, benefiting first
time buyers and upgraders.
7.0%
6.5%
6.0%
Shanghai new commodity residential
supply fell 53% in Q1/2015, to 1.8
million sq m, down 30% year-on-year
(YoY). Transaction volumes dropped
44% QoQ to 2.0 million sq m, while
transaction prices stayed firm with
a slight decrease of 0.2% QoQ,
averaging RMB28,500 per sq m in
the first quarter.
5.5%
5.0%
Source: People's Bank of China, Savills Research
GRAPH 2
First-hand commodity residential
market supply, transactions and
prices Q1/2006–Q1/2015
Supply (LHS)
Transaction volume (LHS)
Policies
Average transaction price (RHS)
35,000
6
30,000
5
25,000
4
20,000
3
15,000
2
10,000
1
5,000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
7
2006
2007
2008
2009
2010
2011
2012
2013
0
2014 2015
Source: Shanghai Real Estate Transaction Centre, Savills Research
RMB per sq m
million sq m
The central government announced
a reduction in down payment
requirements and a shortening of
the applicable period of business
tax from five to two years a measure
commonly referred to as the “330
policy” as it was announced on
March 30.
more than 5 yr
7.5%
0
and the National Committee of
the Chinese People's Political
Consultative Conference) in March
2015, a stark contrast to the cautious
tones seen in 2014.
PBoC cut interest rates by 25 bps
in Feb 2015
The People’s Bank of China (PBoC)
cut interest rates in February 2015,
only three months after the last
revision in November 2014. The
one-year lending rate and deposit
rate both fell 25 basis points (bps) to
5.35% and 2.5% respectively, while
the five-year benchmark lending rate
was reduced from 6.15% to 5.9%.
The reduction in rates is primarily
to support the overall economy
but has already, along with other
policies, had a big impact in the real
estate market, renewing homebuyer
enthusiasm and giving developers
a bit more breathing room. The new
interest rate came into effect on 1
March 2015.
China lowered down payment and
loosened tax policies
The PBoC, the Ministry of Housing
and Urban-Rural Development
(MOHURD) and the China Banking
Regulatory Commission (CBRC)
jointly announced further supportive
measures for the property market on
March 30, commonly referred to as
the “330 policy”.
Down payment requirements
Down payment requirements for
second-home buyers were reduced
to a minimum of 40%, including
those who have not fully repaid
their first mortgage, down from the
previous requirement for a 60-70%
down payment (depending on the
city, with tier-one cities all at 70%).
Down payment requirements for
first-home buyers were also reduced
to a minimum of 20% if using a
housing provident fund. Buyers that
already own a property but have no
outstanding mortgage can also apply
for use of the housing provident
fund, with a minimum down payment
requirement of 30%.
Business tax
The holding period at which higher
rates are applicable was shortened
from five years to two years. Under
the new regime, if ordinary housing
is held for more than two years it
will be exempt from business tax,
while non-ordinary (luxury) housing
will be charged based upon the
TABLE 1
The history of business tax in China
Issued year
2005
2006
2008
2009
2011
2015
Effective date
Jun-05
Jun-06
Jan-09
Jan-10
Jan-11
Mar-15
Exemption period (X years)
2
5
2
5
5
2
Ordinary House
Non-Ordinary House
0 – X yrs
TV
TV
CG
CG
TV
TV
≥ X yrs
Exempted
Exempted
Exempted
Exempted
Exempted
Exempted
0 - X yrs
TV
TV
TV
TV
TV
TV
≥ X yrs
CG
CG
CG
CG
CG
CG
Source: Ministry of Finance of the People's Republic of China
TV = Full tax required based on total values
CG = Tax required based on the capital gain between selling price and purchasing cost
02
Briefing | Shanghai residential sales
GRAPH 3
First-hand market inventory3 and
digestion period, Jan 2008–Mar 2015
Unsold inventory (LHS)
Second-hand residential transaction
volumes decreased by 13.5% QoQ
totalling 3.7 million sq m in Q1/2015,
while average transaction prices hit a
new record of RMB23,000 per sq m,
up 1.6% QoQ and 14.5% YoY.
10
10
8
8
6
6
4
4
2
2
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
0
Source: Shanghai Real Estate Transaction Centre, Savills Research
3
Includes both commodity and economical housing.
GRAPH 4
Second-hand residential sales market4
transactions and prices, Q1/2007–
Q1/2015
Core district transaction volume (LHS)
Fringe district transaction volume (LHS)
Core district price (RHS)
Fringe district price (RHS)
8
million sq m
Due to the popularity among parents,
housing prices in school districts
remained at high levels. Following
the Jing’an district government, more
districts (including Hongkou, Zhabei
and Baoshan) brought into effect
the policy of limiting the use of one
house to enrol children from more
than one family within a five-year
period, which is expected to reduce
second-hand housing turnover rates.
With these new restrictions in place,
1 Commodity housing excludes residential properties designated for relocated residents under
urban redevelopment plans, as well as economical
housing.
12
Non-core district transaction volume (LHS)
Overall average price (RHS)
Non-core district price (RHS)
40,000
7
35,000
6
30,000
5
25,000
4
20,000
3
15,000
2
10,000
1
5,000
0
0
2007
2008
2009
2010
2011
2012
2013
RMB per sq m
Due to seasonal factors, the firsthand commodity residential market
recorded a fall in both demand
and supply in the first quarter. New
supply decreased by 53.5% QoQ
to 1.8 million sq m and transaction
volumes dropped by 44% QoQ,
totalling 2.0 million sq m in Q1/2015,
reversing the continuous oversupply
situation which had been in effect
since the beginning of 2014.
12
0
Jan-08
Second-hand residential (including
both commodity and economical
housing) listings have recorded a fall
in total area since 2012, totalling 7.7
million sq m of 77,300 units at the
end of Q1/2015.
Overall commodity1
residential market
14
million sq m
Unsold first-hand residential
inventory witnessed consecutive
decreases in the first three months
of 2015, reaching 12.4 million sq m
with nearly 82,900 new units on the
sales market at the end of Q1/2015,
thereby ending the growth trend
which began in early 2013.
Digestion period (RHS)
14
months
Shanghai offered more HPF
mortgages to homebuyers
In response to the central
government’s call on making full use
of HPF to help low- and middleincome residents improve their
housing conditions, Shanghai raised
the maximum limit for HPF loans
in April 2015. From 15 April, an
individual in Shanghai can borrow
as much as RMB500,000 from the
HPF to buy a first home or second
ordinary house, while a family with
more than two people contributing
to the HPF can borrow up to RMB1
million.
First-hand transaction prices
remained stable, averaging
RMB28,500 per sq m in Q1/2015,
down 0.2% QoQ but up 10.8% YoY.
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
capital gain. If the property is held for
less than two years, irrespective of
whether it is ordinary or non-ordinary,
a business tax will be applied to the
full value of the property at the time
of sale.
May 2015
2014 2015
Source: Shanghai Real Estate Transaction Centre, Savills Research
Core districts: Changqing, Jing'an, Xuhui and Huangpu.
4
Non-core districts: Hongkou, Putuo, Zhabei, Yangpu, Minhang and Pudong (including Nanhui)
Fringe: Baoshan, Fengxian, Chongming, Jinshan, Qingpu and Songjiang.
TABLE 2
Shanghai HPF mortgage maximum limit, before & after policy
First home / second ordinary home buyers
(RMB million)
Before
After
Second non-ordinary home buyers
(RMB million)
Individual
Family (>2 people)
Individual
HPF loan cap
0.3
0.6
0.2
Family (>2 people)
0.4
Extra HPF loan cap
0.1
0.2
0.1
0.2
Total
0.4
0.8
0.3
0.6
HPF loan cap
0.5
1.0
0.4
0.8
Extra HPF loan cap
0.1
0.2
0.1
0.2
Total
0.6
1.2
0.5
1.0
Source: Shanghai Provident Fund Management Centre
TABLE 3
First-hand commodity residential market by property type, Q1/2015
Supply
Transactions
sq m
QoQ (%)
sq m
QoQ (%)
Apartment
1,518,100
-57.2
1,718,400
Villa
315,500
-15.5
240,800
Overall
1,833,700
-53.3
1,959,100
Average price
Price index 2
RMB per sq m
QoQ (%)
(Dec 2010 = 100)
QoQ (%)
-44.5
28,300
+0.4
-
-
-40.8
29,900
-4.6
-
-
-44.0
28,500
-0.2
118.5
-0.1
Source: Shanghai Real Estate Transaction Centre, National Bureau of Statistics, Savills Research
2
This price index is based on 70 main city house indices published by NBS.
savills.com.cn/research
03
Briefing | Shanghai residential sales
May 2015
potential home buyers with children
may look at districts which don’t
have these policies in place as yet.
GRAPH 5
First-hand high-end apartment
market5 supply, Q1/2005–Q1/2015
Primary area
Secondary area
High-end residential
sales market
Emerging area
600,000
First-hand, high-end apartment
supply was relatively limited in the
first quarter. Only one new project,
Joffre Classic, was launched,
bringing 37 new units onto the sales
market, while the rest of the supply
was a new phase (124 units) of an
existing project, Oriental Bay in the
Xuhui district.
500,000
sq m
400,000
300,000
200,000
100,000
0
Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/14 Q1/15
Source: Shanghai Real Estate Transaction Centre, Savills Research
Primary: Well-established luxury residential enclaves within the inner ring road ( Huaihai Road (M),
5
Lujiazui Riverside, Xinhua Road, etc).
Secondary: Developing high-end residential enclaves within the middle ring road (Huamu,
Dapuqiao, Gubei, etc).
Emerging: Emerging high-end residential enclaves outside the middle ring road (New Jiangwan
Town, Sanlin, Waigaoqiao, etc).
GRAPH 6
First-hand high-end apartment market
transactions and prices, Q1/2005–
Q1/2015
Secondary area transaction volume (LHS)
Primary area price index (RHS)
Emerging area price index (RHS)
Joffre Classic (淮海名邸)
New high-end apartment transaction
volumes recorded a drop of 47.6%
QoQ to 158,400 sq m, as a result
of the high base in Q4/2014 and
limited new launches in the first
quarter. Transaction prices continued
a moderate growth of 1.9% QoQ
on an index basis to an average of
RMB66,100 per sq m by the end of
Q1/2015.
Located north of the Red Town Art
Zone (红坊创意园区) on Xinhua Road
in the Changning district, Joffre
Classic is a new, high-end apartment
complex developed by BM Holding.
The project enjoys easy access to the
Hongqiao Road Station (Metro Lines
3, 4, 10) and is within five minutes’
drive of the Inner Ring Road and the
Yan’an Elevated Road.
Shanghai’s high-end residential
market has recently witnessed
outstanding sales performance
in new launches. Developed by
Franshion Properties, Daning
Jinmao Palace is a new, high-end
apartment project located in the
350
300,000
300
250,000
250
200,000
200
TABLE 4
150,000
150
Second-hand residential market by property type, Q1/2015
100,000
100
50,000
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
20142015
Source: Shanghai Real Estate Transaction Centre, Savills Research
Second-hand, high-end apartment
market6 transactions and price index,
Q1/2006–Q1/2015
Transaction volume (LHS)
300
100,000
250
200
60,000
150
100
20,000
50
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
40,000
2007
2008
2009
2010
2011
2012
2013
2014 2015
Source: Shanghai Real Estate Transaction Centre, Savills Research
6
Based upon a basket of 20 high-end apartment projects.
0
Q1/06 = 100
80,000
2006
Average transaction price
sq m
QoQ (%)
RMB per sq m
QoQ (%)
Apartment
3,527,300
-13.9
22,800
+1.5
Villa
181,700
-5.9
26,900
+1.5
Overall
3,709,000
-13.5
23,000
+1.6
TABLE 5
Top five bankuai/areas by first-hand apartment
transaction prices, Q1/2015 vs Q4/2014
Price index (RHS)
120,000
0
Transactions
Source: Shanghai Real Estate Transaction Center, Savills Research
GRAPH 7
sq m
Project focus
350,000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
sq m
Primary area transaction volume (LHS)
Emerging area transaction volume (LHS)
Secondary area price index (RHS)
04
Zhabei district. 304 apartment units
were launched in April 2015, adding
38,700 sq m to the sales market.
Major unit types and sizes include
95 sq m (three bedrooms), 158 sq
m (three bedrooms) and 192 sq m
(four bedrooms). A high sales rate of
over 70% was reported to have been
reached on the launch day, with sales
values totalling RMB2.1 billion.
Q1/2015
Q4/2014
Average transaction price
(RMB per sq m)
Bankuai
District
Huaihai Road (M)
Huangpu
125,200
Lujiazui Riverside
Pudong
125,000
Nanjing Road (W)
Jing'an
93,500
Xinhua Road
Changning
86,700
Huangpu Riverside
Huangpu
85,600
Lujiazui Riverside
Pudong
128,300
Huaihai Road (M)
Huangpu
126,500
Nanjing Road (W)
Jing'an
97,300
Huangpu Riverside
Huangpu
82,400
Longhua
Xuhui
75,400
Source: Shanghai Real Estate Transaction Centre, Savills Research
Briefing | Shanghai residential sales
May 2015
Covering a site area of 5,770 sq m,
Joffre Classic has a relatively low plot
ratio of only 1.9 and conforms to the
overall architectural style in the area.
The project comprises nine, multistorey residential buildings, totalling
140 units.
Second-hand, high-end apartment
transaction volumes decreased by
14.9% QoQ while transaction prices
saw a moderate increase of 2% QoQ
on an index basis, averaging over
RMB59,700 per sq m in Q1/2015.
The project launched 37 apartment
units (Phases 3 and 4) in Q1/2015,
adding nearly 10,500 sq m onto
the sales market. Phases 3 and 4
consist of one eight-storey and two
seven-storey towers with major
unit sizes ranging from 237 sq m (3
bedroom) to 288 sq m (4 bedroom).
Current asking prices start from
RMB120,000 per sq m. Fully-fitted
units are expected to be handed over
in Q3/2016. Phases 1 and 2 are now
under planning.
The Shanghai residential land market
proved quiet in the first quarter of
the year, with both sales volumes
and values recording QoQ and YoY
falls. Eleven residential land plots
were transacted in Q1/2015, totalling
918,900 sq m of buildable area,
down 75% from 3.7 million sq m
in Q4/2014. Meanwhile, land sales
values plunged 75.3% QoQ, totalling
RMB13.6 billion in the first quarter.
Residential land market
acquired by Greattown Holdings
for a total consideration of RMB5.1
billion. Many well-known developers
participated in the auction, including
Yanlord, Gemdale and Sunac.
Plot D-03-05a has a site area of
61,200 sq m and a plot ratio of 1.7,
with an AV of RMB27,900 per sq
m. Plot D-04-07 has a site area of
52,200 sq m and a plot ratio of 1.4,
GRAPH 8
Residential land transaction area
(buildable area) and AV, Q1/2007–
Q1/2015
Despite low transaction volumes,
the AV remained at a high level,
averaging RMB14,800 per sq m in
Q1/2015. Average premium over
the reserve price in the first quarter
reached 24.2%, a drop of 10.1
percentage points (ppts) QoQ.
As the area matures, many new highend developments have been built,
while the preservation of parts of the
former French Concession has meant
that new development projects have
been limited. High-end residential
sales projects such as 1 Xinhua Road
and Central Residence have sold
out, with second-hand transaction
prices now reaching RMB70,000 to
RMB90,000 per sq m.
The Shanghai residential land market
witnessed a new AV record in April
2015 outside of the Outer Ring Road.
Two pure commodity residential land
plots in Tangzhen, Pudong were
Source: Shanghai Municipal Bureau of Planning and Land Resources; Savills
Research
TABLE 6
High-end apartment supply, Q1/2015
Launch
date
Area
Developer
District
Transaction
price (RMB
per sq m)
GFA
(sq m)
Total no.
of units
Average unit
size (sq m)
No. of units
sold
Joffre Classic
淮海名邸
Mar
Primary
BM Holding
Changning
90,000
10,500
37
285
7
Oriental Bay Jinyuan
云锦东方•锦园
Mar
Secondary
Donghang
Real Estate
Xuhui
90,000
(asking price)
56,000
124
450
-*
Project
Source: Shanghai Real Estate Transaction Centre, Savills Research
*
No transactions registered in the SRETC system as of Q1/2015.
TABLE 7
Top residential land deals by AV, Q1/2015 vs Q4/2014
Q1/2015
Quarter
Q4/2014
Quarter
Date
District
Site area
(sq m)
GFA
(sq m)
Plot ratio
Transacted
price
(RMB million)
Transacted
price (RMB
million)
Premium
(%)
AV (RMB
per sq m)
Mar
Zhabei
76,315
202,234
2.7
6,067
7,052
16.2
34,871
Feb
Minhang
46,201
92,401
2.0
887
1,735
95.6
18,777
Feb
Pudong
19,942
49,855
2.5
696
696
0
13,951
-
-
529,687
918,941
1.7
11,098
13,584
24.2
14,782
Dec
Pudong
13,965
27,931
2.0
871
1,861
113.8
66,629
Dec
Pudong
12,258
24,517
2.0
711
1,614
127.0
65,832
Dec
Pudong
11,695
26,899
2.3
753
1,450
92.5
53,905
-
-
1,659,547
3,673,938
2.2
46,307
54,938
34.3
14,953
Source: Shanghai Municipal Bureau of Planning and Land Resources, Savills Research
05
Briefing | Shanghai residential sales
with an AV of RMB29,700 per sq m.
Surrounding residential projects are
selling for RMB40-45,000 per sq m.
Residential sales
market outlook
A shift by the government to a
generally more supportive stance
has improved market sentiment and
will likely encourage transactions.
However, developers are likely to
remain aggressive in asset turnover,
looking to pay down debt and
become more asset light.
With transaction volumes on the
rise and lower borrowing costs,
Shanghai’s residential transaction
prices are expected to stay firm in
2015, while prices in some areas are
expected to see moderate growth
due to new high-end projects and
expensive land transactions.
May 2015
The second quarter of 2015 is
expected to see more high-end
apartment supply. In addition to the
new launch of Daning Jinmao Palace,
which launched 304 units in April,
Fuxing Royale, a new residential
project located in Laoximen, in the
Huangpu district, is expected to
launch in Q2/2015. Bund House in
Huangpu Riverside may release its
new launch in May 2015, with the
top-floor unit said to be priced at
RMB380,000 per sq m.
As the Shanghai Composite Index
rose 38.4% in Q1/2015, reaching
almost 4,500 by the end of April, and
analysts start talking about a bubble,
some long-term investors may reenter the housing market to secure
stock gains. As a result, market
growth looks set to improve over the
course of 2015. 
The Shanghai residential land market
is likely to see competition for new
land plots remain fierce for the rest
of 2015.
Residential property in Shanghai is
still regarded as an important way
to retain wealth value, especially by
domestic high-net-worth individuals.
Please contact us for further information
Savills Research
Savills Residential Sales
James Macdonald
Director, China
+8621 6391 6688
[email protected]
Siu Wing Chu
Deputy Managing Director
+8621 6391 6688
[email protected]
Shirley Tang
Director
+8621 6391 6688
[email protected]
Michelle Zhou
Associate Director
+8621 6391 6688
[email protected]
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