The residential market in China is expected to consolidate in 2010 because of the country’s measures to rein in its property bubble, said property consultancy firm CBRE.
According to the latest government data, prices of residential properties across China increased year-on-year by about 13 percent in April.
Property prices have been increasing for months, gaining 24 percent for the whole of last year.
However, with the new measures introduced by Chinese officials to tighten lending, and rules on buying real estates, the picture appears set to change in H2 2010.
“I don’t think anyone expected the market to come back as quickly as it did in 2009 and obviously the government has felt the need to step in and make sure that speculation doesn’t get out of control, in terms of the increase in prices and levels of affordability,” said Mr. Chris Brooke, president & CEO of CBRE in Asia.
CBRE said that the residential property prices in cities like Qingdao, Shanghai and Beijing could drop by about five percent in the next few months, as the tightening measures by the government are now becoming wider than before, focusing on mortgage lending, land supply and restricting state-owned enterprises from purchasing properties.
The risk of bubbles forming in the residential property markets of Singapore, Hong Kong and China is unlikely, as government measures will result in a soft landing for prices, added CBRE.
The company sees a flat year in office space for Shanghai and Beijing, where rents are expected to bottom out.
“Rates will be stable due to the volume of supply on the market. Although demand is increasing, there is still a lot of supply to be absorbed in those markets. So we might see some marginal increase in those markets, but it won’t be a V-shaped recovery,” said Mr. Brooke.
Office rental rates may increase by five percent in Shanghai and Beijing, as well as in Singapore, mainly due to growing supply, while a limited supply will see HK’s office rentals go up by a larger 10 percent to 15 percent.