Demand in Pudong gives city’s leasing market a boost
STRONG demand for serviced apartments and villas in the Pudong New Area boosted the citywide leasing market in the first quarter, according to a report released by Savills China Research. It said the trend was likely to continue.
International hospitality chains are looking for ways to grab a larger slice of the market in the extended-stay segment.
In the first three months of this year, serviced apartment vacancy rate dropped by 1.6 percentage points quarter-on-quarter to 14.9 percent, according to Savills, a global real estate services provider. The monthly rent of service apartments fell by 0.2 percent quarter-on-quarter to 230 yuan (US$34) per square meter.
Approximately 100 million people will move to urban areas over the next few years, according to a urbanization report issued by State Council last year. That will increase the size of the leasing market to over 1 billion yuan, and developers hope to capitalize on this trend by building on their leasing platforms, said Savills.
Stanford Residences, the high-end serviced apartment brand of K. Wah International Holdings Ltd, opened its second property in Xuhui District earlier this month, after satisfactory feedback from its first property in downtown Jing’an District.
Almost 90 percent of the units at the 113-key Stanford Residences Jing An had been leased out by the end of last year. More than 20 clients have signed contracts for the new 119-unit Stanford Xu Hui on the intersection of Jiashan and Jianguo roads.
With developers shifting their business models from purely sales to a combination of sales and management, competition in the residential leasing market is expected to intensify following the arrival of bigger players, said Savills.
“One of the key strengths about Stanford Residences is that we are both the property owner and operator, which means we usually get ourselves involved in the project from early stages of development including design and construction,” said Leo Lee, associate director of K. Wah (China) Investment Co Ltd. “Designed with the philosophy of ‘a home away from home,’ Stanford Residences seeks to offer its residents a true living experience rather than just luxury accommodation.”
It will launch its third property in Jinqiao in the second half of this year.
Increasing difficulty in finding suitable housing at affordable pricing, combined with the increasing emphasis home buyers place on livability, convenience and mobility, is expected to expand residential leasing demand as many singles and childless couples elect to lease apartments as against buying a home, according to Savills.