Shenzhen’s commercial and residential property markets saw a lift in the second quarter of the year, driven by improved business sentiment and government support policies.
According to international real-estate services provider Savills, several big deals on the leasing of Grade-A offices were sealed in that time, with enterprises adopting a positive attitude to relocation or expansion.
Office rental demand among companies engaged in information technology, finance, and professional services remained robust, with over 60 percent of the transactions coming from those sectors. Positive signs were also seen in the consumer services, retail, and trade sectors as they increased property investments amid better business.
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The optimism, coupled with decreased supply, led the vacancy rate of Grade-A offices in Shenzhen to drop to 29.8 percent in the second quarter — down 0.7 percentage points from the previous quarter. However, average rental prices in the city dropped 2.1 percent quarter-on-quarter to 160.40 yuan ($22.05) per square meter per month.
The Shenzhen municipal government’s intensified efforts to attract enterprises to set up offices in the city have produced positive results, as evidenced by the growth in demand among businesses in the IT, finance and modern services sectors, said Carlby Xie, head of southern China research at Savills.
Nevertheless, the commercial property market still faces pressure in reducing stocks as the macroeconomic environment remains uncertain, and firms are cutting their budgets against the backdrop, he added.
The southern metropolis unveiled various documents this year to improve its business environment and further attract foreign capital. It has vowed to relax market access for overseas capital and optimize services for foreign investments.
Residential properties in Shenzhen also saw a boost in the second quarter as government policies to lower the minimum ratio of down payments and mortgage rates gave the flagging sector a shot in the arm.
The transaction volume in residential properties hit 718,000 square meters during the April-to-June period, growing 10.5 percent on a quarterly basis, Savills reported. Average housing prices remained flat at 61,438 yuan per square meter.
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Under the new policies, the minimum down payment ratio for first-home buyers has been reduced from 30 percent to 20 percent, while the ratio for second-home buyers has been cut to 30 percent from the previous 40 percent.
The incentives have enabled homebuyers to enjoy preferential mortgage rates, with the commercial loan rate as low as 3.5 percent for first-home buyers and 3.9 percent for second-home buyers.
Ray Wu, managing director of Savills Shenzhen, said the new policies have greatly lifted market sentiment.
“However, it’s still far from a full recovery,” he said. “If such sentiment could persist until the end of the year, then we can say the ‘long cold winter’ is no longer with us.”
