CB Richard Ellis Research reports that with the arrival of 2010, most of the 15 major cities in China it monitors exhibited upswings in performance. Sales markets for both prime office and luxury residential real estate continued to trend north while rental quotations varied among the regions. During the first quarter, the People’s Bank of China raised the deposit reserve rate twice in order to tighten the money supply. In addition, the central government released the "State Council’s 11 point measures" and "State Council’s 19 point measures", further strengthening macroeconomic controls on real estate lending and land resource management.
North China
In the first quarter, the overall prime property market in north China showed a rising trend, highlighted by the high-end residential market in terms of both rental and sales prices; major indicators in five cities all increased. The office market performed less well, with only slight rental rises in Beijing, Tianjin, Qingdao and Shenyang driven by demand, and a small drop in Dalian rentals. The retail market saw rental rises in Beijing, Tianjin, Qingdao and Dalian and a decrease in Shenyang. Logistics facilities rentals edged up in Tianjin and Shenyang, remained the same in Beijing and Dalian and dropped in Qingdao.
East China
During the first quarter of 2010, the prime office market in four East China cities performed in lockstep. Prime office asking rental continued to see fluctuations within a narrow range, with negative growth in Hangzhou and Nanjing and increases in Shanghai and Ningbo. The sales market remained in an upswing in both the prime office and luxury residential sectors. However, growth rates in Shanghai and Hangzhou started to become moderate. Prime retail markets in the region continued to exhibit buoyant performance, with the asking rental continuing to grow. The industrial property market remained relatively flat compared with the other sectors.
South China
During the first quarter of 2010, market sentiment witnessed substantial improvement in Guangzhou and Shenzhen prime office leasing. Rentals of prime office space recorded positive quarterly growth in both markets – the first time since the outbreak of the global financial turmoil. As in the past, Shenzhen recovered more quickly than Guangzhou. In the luxury residential primary market, the sales price of luxury apartments continued to surge, with quarter-on-quarter growth of 6.8 percent in Guangzhou and 9.8 percent in Shenzhen, despite prevailing cautious sentiment in this sector. High-end residential leasing saw a strong recovery, particularly in Shenzhen, where a 10.2 percent quarterly rental pickup was reported. By comparison, prime retail and logistics facility leasing were relatively quiet, with only prime retail rents in Guangzhou and logistics rents in Shenzhen showing narrow quarterly increases.
West and Central China
The prime office markets in western and central China are slowly but definitely emerging from the impact of the global financial tsunami that started at the end of 2008 – rents in the region reviewed were either flat or have begun to rise slowly – for the first time in over a year. New buildings are coming on stream in Chengdu and Chongqing, but overall vacancy rates in the region declined primarily a result of the absorption of Grade B buildings (although Chengdu has seen an increase). Prime retail rents saw a mild rise, but vacancy rose dramatically in Chengdu due to the addition of Renhe Spring Guanghua Branch, part of the Yanlord Landmark, as well as the reshuffling of tenant mix in the Deluxe Shopping Centre. The luxury residential leasing markets were steady in all four cities covered, but sales prices recorded double-digit quarter-on-quarter growth in Chongqing and Xi’an largely because the luxury residential property sector is still in the nascent stage in these two cities. Industrial property markets continued their steady performance.
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