Page 320 - 2018 White Paper on the Business Environment in China
P. 320
8 White Paper on the Business Environment in China
China will see more rental projects in the near future,” China 2025 strategy, population transformation and
said a CRIC research note (Wu). migration, as well as consumption upgrade will become
the six main driving forces to influence commercial
No doubt, such administrative measures do yield real estate investment strategies,” said Xie Chen, Head
temporary results. But overall, realty prices in China of CBRE Research in China. Viewed from the city level,
have surged in the past decade, with those in some Beijing and Shanghai are running ahead of other cities
major cities increasing more than tenfold. This strong in terms of transaction volume and trading activity, and
surge in prices has made many doubt the sincerity have even outpaced other major markets in Asia Pacific.
of policymakers in cooling the real estate market. So From 2014 to 2016, the transaction volume and trading
policymakers have to rethink their short-term demand- activity in bulk property deals in Shanghai surpassed
repressing strategy and find a more effective way to that of Hong Kong and Singapore. According to a report
stabilize the real estate market. Perhaps, as 2016’s from real estate consultancy Colliers International,
tone-setting Central Economic Work Conference said, the transaction volume of bulk commercial real estate
China should put in place a “long-term mechanism” (CRE) deals in Shanghai in 2016 amounted to 95
to effectively manage the market. Such a mechanism billion yuan, maintaining its momentum from 2015.
would include increasing land supply, stabilizing At the same time, a report by Cushman & Wakefield, a
money supply, reforming the real estate tax system, and leading global real estate services firm, showed that
developing public rental housing. China has achieved the trade volume of bulk CRE deals in Beijing reached
some headway on these fronts. For example, the growth a record 37.6 billion yuan. CBRE Group estimated that
of money supply, measured by M2, dropped to 9.6 Shanghai and Beijing will take up 60 percent of the total
percent in May 2017, one of the lowest levels in recent trade volume by 2020, while Guangzhou, Shenzhen,
years. The government is also mulling imposing a tax on Chengdu, Chongqing, Tianjin and Wuhan will serve as
people who own more than one house (Xin). markets with high potential to account for 36 percent of
the newly added transaction amount. It also predicted
However, China still lacks a sound public rental that the period between 2017 and 2020 is the time for
housing system that can provide accommodation for domestic organizations to build a position, and 1 trillion
low-income people who cannot afford high-rental yuan is estimated to enter the market (Hu and Zheng).
commercial housing. According to Sheng Songcheng,
a senior official of the central bank, those covered by In the first six months of 2017, the floor space of
the public rental housing program account for only 3.4 commercial buildings sold stood at 746.62 million square
percent of the permanent urban residents in the country. meters, a year-on-year increase of 16.1 percent, and was
The low ratio means a large number of low-income up by 1.8 percentage points over the first five months in
people still do not have access to subsidized housing and 2017. Of the total, the floor space of residential buildings
therefore have to pay huge amounts to buy or rent an increased 13.5 percent, office building increased 38.8
apartment. Public rental housing not only has a bearing percent, and buildings for business use increased 32.5
on the livelihoods of low-income people, it also plays an percent. The sales of commercial buildings amounted
important role in helping stabilize the real estate market to 5,915.2 billion yuan, an increase of 21.5 percent,
by reducing the demand for commercial housing, which the rate of growth went up by 2.9 percentage points.
in turn eases housing prices. In Chongqing, for example, Specifically, the sales of residential buildings went up
the public rental housing program covered about 60 by 17.9 percent, office buildings was up by 38.9 percent,
percent of new permanent residents in the 2011-2015 buildings for commercial business increased 41.7
period, during which prices of commercial apartments percent. The sale of floor space of commercial buildings
increased by less than 3 percent. In contrast, Tianjin’s in eastern region amounted to 334.01 million square
public rental housing program covered only about 20 meters, the growth rate increased 11.7 percent year-on-
percent of the new permanent residents from 2011 year, the growth pace was up by 2.8 percentage points
to 2015. As a result, commercial housing prices there over the first five months in 2017. The amount of sales
increased by 24 percent (Xin). stood at 3.47 trillion yuan, went up by 14.4 percent, the
rate of growth expanded 2.9 percentage points. The sale
Commercial Services of floor space of commercial buildings in central region
amounted to 191.40 million square meters, increased
“It is estimated that by 2020, infrastructure, 19.9 percent, and the pace of increase went up by 2.2
urbanization, the Belt and Road Initiative, the Made in percentage points. The amount of sales stood at 1.14
320
China will see more rental projects in the near future,” China 2025 strategy, population transformation and
said a CRIC research note (Wu). migration, as well as consumption upgrade will become
the six main driving forces to influence commercial
No doubt, such administrative measures do yield real estate investment strategies,” said Xie Chen, Head
temporary results. But overall, realty prices in China of CBRE Research in China. Viewed from the city level,
have surged in the past decade, with those in some Beijing and Shanghai are running ahead of other cities
major cities increasing more than tenfold. This strong in terms of transaction volume and trading activity, and
surge in prices has made many doubt the sincerity have even outpaced other major markets in Asia Pacific.
of policymakers in cooling the real estate market. So From 2014 to 2016, the transaction volume and trading
policymakers have to rethink their short-term demand- activity in bulk property deals in Shanghai surpassed
repressing strategy and find a more effective way to that of Hong Kong and Singapore. According to a report
stabilize the real estate market. Perhaps, as 2016’s from real estate consultancy Colliers International,
tone-setting Central Economic Work Conference said, the transaction volume of bulk commercial real estate
China should put in place a “long-term mechanism” (CRE) deals in Shanghai in 2016 amounted to 95
to effectively manage the market. Such a mechanism billion yuan, maintaining its momentum from 2015.
would include increasing land supply, stabilizing At the same time, a report by Cushman & Wakefield, a
money supply, reforming the real estate tax system, and leading global real estate services firm, showed that
developing public rental housing. China has achieved the trade volume of bulk CRE deals in Beijing reached
some headway on these fronts. For example, the growth a record 37.6 billion yuan. CBRE Group estimated that
of money supply, measured by M2, dropped to 9.6 Shanghai and Beijing will take up 60 percent of the total
percent in May 2017, one of the lowest levels in recent trade volume by 2020, while Guangzhou, Shenzhen,
years. The government is also mulling imposing a tax on Chengdu, Chongqing, Tianjin and Wuhan will serve as
people who own more than one house (Xin). markets with high potential to account for 36 percent of
the newly added transaction amount. It also predicted
However, China still lacks a sound public rental that the period between 2017 and 2020 is the time for
housing system that can provide accommodation for domestic organizations to build a position, and 1 trillion
low-income people who cannot afford high-rental yuan is estimated to enter the market (Hu and Zheng).
commercial housing. According to Sheng Songcheng,
a senior official of the central bank, those covered by In the first six months of 2017, the floor space of
the public rental housing program account for only 3.4 commercial buildings sold stood at 746.62 million square
percent of the permanent urban residents in the country. meters, a year-on-year increase of 16.1 percent, and was
The low ratio means a large number of low-income up by 1.8 percentage points over the first five months in
people still do not have access to subsidized housing and 2017. Of the total, the floor space of residential buildings
therefore have to pay huge amounts to buy or rent an increased 13.5 percent, office building increased 38.8
apartment. Public rental housing not only has a bearing percent, and buildings for business use increased 32.5
on the livelihoods of low-income people, it also plays an percent. The sales of commercial buildings amounted
important role in helping stabilize the real estate market to 5,915.2 billion yuan, an increase of 21.5 percent,
by reducing the demand for commercial housing, which the rate of growth went up by 2.9 percentage points.
in turn eases housing prices. In Chongqing, for example, Specifically, the sales of residential buildings went up
the public rental housing program covered about 60 by 17.9 percent, office buildings was up by 38.9 percent,
percent of new permanent residents in the 2011-2015 buildings for commercial business increased 41.7
period, during which prices of commercial apartments percent. The sale of floor space of commercial buildings
increased by less than 3 percent. In contrast, Tianjin’s in eastern region amounted to 334.01 million square
public rental housing program covered only about 20 meters, the growth rate increased 11.7 percent year-on-
percent of the new permanent residents from 2011 year, the growth pace was up by 2.8 percentage points
to 2015. As a result, commercial housing prices there over the first five months in 2017. The amount of sales
increased by 24 percent (Xin). stood at 3.47 trillion yuan, went up by 14.4 percent, the
rate of growth expanded 2.9 percentage points. The sale
Commercial Services of floor space of commercial buildings in central region
amounted to 191.40 million square meters, increased
“It is estimated that by 2020, infrastructure, 19.9 percent, and the pace of increase went up by 2.2
urbanization, the Belt and Road Initiative, the Made in percentage points. The amount of sales stood at 1.14
320
