Beijing’s investment market witnessed a rebound in the proportion of office property transactions in the quarter. Joy City listed its COFCO Landmark project for public sale on the Beijing Equity Exchange and announced at the end of the quarter that it had signed an equity transfer agreement with China Post Life, corresponding to a transaction amount of RMB 4.26 billion. In addition, Jianan Building Tower Two, formerly held by China Aoyuan and located in Beijing’s South Second Ring Road, was sold through foreclosure for RMB 3.48 billion.

The growth momentum of investor focus on rental housing continued. Currently, logistics, rental housing, and assets with apartment conversion possibilities continue to receive voluminous attention, with both domestic and foreign investors actively seeking investment opportunities. “Currently, the investment market in Beijing is dominated by self-use demand,” said Jessie Xu, Operations Director of China and Head of Capital Markets North China, JLL. “From an investment perspective, prices at this stage are struggling to meet the return expectations of both buyers and sellers, and the adjustment in market expectations is expected to continue further.”

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Pent-up demand released in the short-term under policy incentives. A total of 1,423 luxury apartment units were sold in the quarter, down 30.5% q-o-q and 16.7% y-o-y. In the first half of the quarter, sales continued to decline due to low supply and strong market wait-and-see sentiment. A new policy in early September was effective in stimulating onlookers to enter the market and helped stop sales from falling and stabilise. Larger discounts have been offered on a small number of housing units in projects that experienced sluggish sales in the early stages, in the hope of seizing the positive-policy window and accelerating the pace of sales and capital turnover, pushing the average price down by 0.9% q-o-q. The transaction volume declined in the off-season. The increase in the number of listings has prompted some landlords to increase leasing flexibility to shorten the vacancy period, driving down rents by 0.2% q-o-q.

Rules may ease further; demand and supply will be stable. Developers are more willing to launch projects with the onset of the traditional peak sales season of October. The entry of new projects will continue to drive demand release. “With the introduction of the new policies, more homebuyers in need of improvement are expected to enter the market, pushing up high-end residential sales,” said Mi Yang, Head of Research for JLL North China. “As market confidence and demand recover, high-end residential prices will gradually stabilise in the short term. Given that the supply and demand structure of the high-end residential market has not changed, prices should still show growth momentum in the mid to long-term.”