Polarization in China's Real Estate Market... Luxury Housing Transactions Up 48%

The volume of luxury home transactions in China has surged, widening the gap with the commercial real estate market.

According to JLL, a global comprehensive real estate services company, the number of luxury home transactions in Beijing in the second quarter of this year reached 2,048 units, a sharp increase of 48.1% compared to the previous quarter. However, this represents a 17.3% decrease compared to the same period last year.

[Image source=Yonhap News]

This contrasts with the sluggish trend in commercial real estate, such as office building leasing demand easing. The vacancy rate in Beijing’s Grade A office market in the second quarter was 10.3%, and rents continued to decline, falling 1.8% quarter-on-quarter and 4.0% year-on-year. Zhang Ying, Chief Strategy Officer at JLL, explained, "China’s economic trend is normalizing, but the performance of the commercial real estate market is somewhat different," adding, "Adjustments in office rents may continue until next year."

China Economic Net explained, "Positive signals from credit policies and ongoing projects throughout the year increased housing purchase demand at the end of the quarter, driving the rise in luxury residential property sales."

According to market information firm China Real Estate Information Corporation (CRIC), the volume of luxury home transactions priced above 50 million yuan (approximately 9 billion KRW) increased by 35% year-on-year from January to May this year. Transactions for homes priced between 10 million and 30 million yuan (approximately 1.8 billion to 5.4 billion KRW) and between 30 million and 50 million yuan also rose by 45% and 13%, respectively, during the same period. However, the overall market sentiment shows the opposite trend. According to the National Bureau of Statistics of China, the total housing sales area from January to May decreased by 0.9% year-on-year. New home prices in 70 cities rose by only 0.1% in May.

Meanwhile, on the 10th, the People’s Bank of China and the National Financial Regulatory Administration jointly announced a plan to partially extend relief measures for real estate developers. The core of the plan is to extend the repayment deadlines for some outstanding loans maturing before December 31, 2024, by one year beyond the original regulation.

Economic media outlet Caixin cited data from Zhongzi Research Institute, a Chinese real estate research organization, reporting that real estate policies in the first half of this year showed a somewhat sluggish trend. Regarding the delay in market recovery, it diagnosed that "poor resident income, expectations of falling housing prices, and concerns about unfinished properties are key factors."

This content was produced with the assistance of AI translation services.