Major trends in the Shanghai residential market last year were slowing
supply, falling vacancy in Pudong and a dramatic increase in supply of
Serviced Apartments in central Shanghai. An additional 78 villas and
912 apartments came onto the market in Shanghai during the fourth
quarter, taking supply for the year to 2,655 units and giving current
total stock of 37,809 overseas sale residential units. The slowing
rate of new completions will continue and 1999 and 2000 are expected
to see a total of 4,861 new units completed.
1998 was a year for serviced apartments and projects such as
Shangri-La Residence, 41 Hengshan Road, Century Court, Royal Pavilion
and Regency Shanghai came onto the market during the year. The
resulting pressure on rents forced a correction in the serviced
apartment market. In The Shanghai Centre, which celebrated its 8
anniversary in the 4th quarter last year, rents have been reduced to
US$45 per sq.m. per month from US$64 per sq.m. per month at the end of
1997, at the same time the interior of units have been upgraded to
retain its competitive edge.
Tenants looking for a serviced apartment need to be able to carry out
a full comparison of design and layout characteristics as well as
rent, facilities and location. There is no substitute for visiting
projects to see at first hand what layouts are like and which
facilities are available.
With falling rents take up of serviced apartments was rapid last year.
The new serviced apartment projects including Royal Pavilion, 41
Hengshan Road (approximately 40 units in the first of 2 blocks
released), Shangri-La Residence, Century Court and Regency Shanghai
have performed well since completion. Average occupancy rates in all
projects except Regency Shanghai is now 45 per cent (based on number
of units released onto the market). Regency Shanghai, which was
completed last November, with its prime location and high quality
leasing is expected to pick up after the traditional quiet period
between Christmas and Chinese New Year so that occupancy should soon
match take up in the other projects.
Our analysis of take up in the new serviced apartment projects reveals
a clear correlation between occupancy rates and unit configuration,
exterior environment and views as tenants are using the oversupplied
market to select only the most suitable and attractive units, measured
in these terms. A total of 24 units in Shangri-La Residence face
south-east offering views of Shanghai International Exhibition Centre
and Nanjing Road and only 2 of these units are left. The market also
shows a preference for 3 bedroom units with occupancy of these
configurations in Shangri-La Residence, Royal Pavilion and 41 Hengshan
Road more than 74 per cent, 90 per cent and 90 per cent respectively.
By comparison the developments are 45 per cent occupied overall, on
average.
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For further details on these or any other residential properties
available in Shanghai contact Sam Crispin or Kevin Harding at
FPDSavills.
FPDSavills Research produce the most comprehensive range of
research materials available covering Shanghai and Beijing office and
residential markets.
To obtain your copies contact Sam Crispin in Shanghai on 6474 8908 x
21 or by e-mail on scrispin@fpdsavills-sh.com
