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Luxury residential rents and yields rise increase in Beijing

BEIJING: Demand for luxury residential leasing in Beijing in the second quarter boosted rentals and yields, leading to a slight improvement in the high vacancy rates in the sector.

Rents of luxury residential properties in the city rose by 4.64% quarter on quarter, or 3.7% year on year, to 140.29 yuan (RM66.44) per square metre per month, property consultancy Colliers International said.

As of end of the second quarter, the stock of luxury residential properties in Beijing totalled 59,034 units, up 1.39% quarter on quarter, and net absorption totalled 1,910 units, which reduced the overall vacancy rate to 23.21%, down 2.21 percentage points quarter on quarter.

"The second quarter has always been the high season for the residential leasing market in Beijing, with the second quarter this year being no exception," Carlby Xie, head of research and advisory at Colliers International North China, said. Demand driven by relocation and the arrival of new expatriates "led to a very active leasing market during the quarter".

"The number of tenants from Japanese, European and American corporations rose sharply, while those from domestic companies were also on the rise," Xie said.

Leasing demand for the luxury apartment sector was expected to remain strong over the next quarter, given the expected continued leasing activity and rising job market, Xie said. The vacancy rate should stay "largely stable" at around 22%, while rents should increase to 141.17 yuan and 147.19 yuan per square metre per month by the end of this and next year, respectively.

The improved sentiment in the sector during the quarter was in contrast to the slow investment activity in the city after the central and local governments released a series of tightening measures.

Despite the recent measures, the country's favourable economic outlook should provide a solid foundation for the property market's healthy development from a long-term perspective, Colliers said. — South China Morning Post
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