Contents...2016/12/13 · Email: [email protected] Tel: 86 21 63589988 URBAN VIEW -2- Macro Economy Trend of Growth of Shanghai CPI (Aug) Category YoY CPI Food Tobacco, liquor and articles

URBAN VIEW -1-

Contents:

2016 Issue No. 7

02 Data & Views

Macro Economy

Urban Data - Shanghai Inventory

Residential Price Index

Urban Analysis - Real Estate Market

Costs of Building Materials &

Construction

23 Industry Focus

Home-purchase restriction stages a

comeback in second-tier cities?

27 In-Depth Observation

Exploration of the classified evaluation

of intensive land use in development

zones

34 News Guidance

Policy & Regulation

Real Estate Finance

Market Highlights

Hosted by: Urban Surveyors -

Shanghai Urban Real Estate

Appraisal Co., Ltd. (SUREA)

Chief Editors: Yuan Donghua,

Wang Changhua

Deputy Editors-in-Chief: He Jian,

Zhuyu

Executive Editor: Qin Yun

Associate Editors: Shao Minghao,

Huang Haisheng, Jiang Qimin, Lin

Feng

Editors: Lin Jingjun, Ren

Chenying, Shi Jian,Mi Huiying

Art Editor: Zhang Tao

Address: 15-18F New Golden

Bridge Plaza, No. 1 West Beijing

Road, Shanghai

Postcode: 200003

Website: www.surea.com

Email: [email protected]

Tel: 86 21 63589988

URBAN VIEW URBAN VIEW -2-

Macro Economy

Trend of

Growth of Shanghai

CPI (Aug)

Category YoY

CPI

Food

Tobacco, liquor and articles

Clothing

Household appliances and

maintenance services

Health care and personal

articles

Transportation and

communication

Recreation, education,

culture articles and services

Residence

-600

-500

-400

-300

-200

-100

0

100

200

300

400

500

14

-1

14

-2

14

-3

14

-4

14

-5

14

-6

RMBmillion

x 1

00

URBAN VIEW

Trend of CPI&PPI, Jan 2014~August 2016

Shanghai Real Estate Loans, Jan 2014~July 2016

YoY % MoM %

1.3 0.1

1.5 0.3

1.3 -0.1

1.5 0.2

0.4 0.0

-1.2 -0.6

1.3 -0.1

4.3 0.3

4.5 0.1

PPI (Aug)

Category YoY

PPI -0.8

Means of production -1.0

Mining industry -3.2

Material industry -2.3

Process industry -0.4

Means of livelihood 0.0

Food 0.1

Clothing 0.8

Articles for daily use 0.7

Durable consumer goods -1.3

14

-7

14

-8

14

-9

14

-10

14

-11

14

-12

15

-1

15

-2

15

-3

15

-4

15

-5

15

-6

15

-7

15

-8

15

-9

15

-10

15

-11

15

-12

16

-1

16

-2

16

-3

16

-4

Growth of real estate development loansGrowth of personal housing loans

URBAN VIEW -3-

6

YoY % MoM %

0.8 0.2

1.0 0.3

3.2 -0.3

2.3 0.1

0.4 0.4

0.0 -0.1

0.1 -0.1

0.8 -0.2

0.7 0.0

1.3 0.0

16

-4

16

-5

16

-6

16

-7

URBAN VIEW -4-

Urban Data

- Shanghai Inventory Residential Price Index

1. Rumor of new policy caused a MoM surge of index.

Although the government

had halted the land

transaction with the

awareness of the high fever

of land market, the

previously transacted

high-priced plots still led to

the increase of inventory housing transactions in consecutive months, which directly

drove the index up.

Shanghai Inventory Residential Price Index was 255.51 in August 2016, a MoMsurge of 7.18% and a YoY rise of 47.66%.

The city’s index increase over the past three months

Month Index MoM Increase

2016. 6 231.84 1.21%

2016. 7 239.39 2.83%

2016. 8 255.51 7.18%

URBAN VIEW -5-

2. Price index beyond the Suburban Ring Road soared by 11.57% in this month.

The outskirt area,

where there were a

large number of

listings with relatively

low prices, played a

leading role in the

price index surge in

this month. Notably,

the MoM index

increase of the area beyond the Suburban Ring Road was as high as 11.57%.

3. 22 sections saw increases over 10%, led by the suburban sections.

In August 2016, all the sections saw different increases in price index, among which

22 sections saw growth over 10%, still led by the suburban sections.

Between OR and SR253.04 9.74%

Within IR 265.13 3.62%

Between IR and MR 276.45 4.99%

Between MR and OR 273.05 6.90%

Outside SR 186.76 11.57%

URBAN VIEW -6-

Urban Analysis——Land Market

1. Supply

1) Overall Supply

As the traditional peak period of land supply came, the supply of business-oriented

land in August significantly rebounded to 109.1 hectares, up 89.1% MoM, creating a

new high for the year. The supply volume of industrial land was 36.9 hectares, staying

at the high level.

2) Supply of Business-oriented Land by Type

By type, retail/office land played a leading role boosted by the huge listings in Qingpu

and Minhang, with 34.5 hectares supplied. Mixed-use land (incl. residential use)

ranked No. 2, with 18.9 hectares listed. Commodity housing land and affordable

housing land ranked No. 3 and No. 4, with 14.8 hectares and 5.4 hectares supplied.

0

20

40

60

80

100

120

140

160

180

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08ha.

Trend of Land Supply

Business-oriented land Industrial land

0

20

40

60

80

100

120

140

160

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08ha.

Supply of Business-oriented Land by Type

Commodity residential land Retail/office land

Affordable housing land Mixed-use land (incl. residential use)

URBAN VIEW -7-

2. Transaction Volume

1) Overall Transaction Volume

Benefitted from the rebound of supply volume, the transaction volume of

business-oriented land further rose to 73.6 hectares, hitting a new high for the year.

The transaction volume of industrial land surged to 69.7 hectares, driven by the

transaction of a parcel for aircraft manufacturing in Lingang which was nearly 330000

sqm.

2) Transaction Volume of Business-oriented Land by Type

By type, the transaction volume of retail/office land rose to 34.5 hectares, ranking the

No. 1; mixed-use land (incl. residential use) won the second place by 19.9 hectares

traded; the transaction volume of commodity residential land fell to 14.8 hectares.

0

20

40

60

80

100

120

140

160

180

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08ha.

Trend of Land Transaction Volume

Business-oriented land Industrial land

0

20

40

60

80

100

120

140

160

180

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08ha.

Transaction Volume of Business-oriented Land by Type

Commodity residential land Retail/office land

Affordable housing land Mixed-use land (incl. residential use)

URBAN VIEW -8-

3. Transaction Price

In August 2016, the average transaction price of business-oriented land saw a further

increase to RMB 51277/sqm. The average transaction price of industrial land declined

to RMB 1186/sqm because of the large-sized low-priced land in Lingang.

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08RMB/sqm

Average Transaction Price of Business-oriented Land

Business-oriented land Commodity residential land

Retail/office land Mixed-use land (incl. residential use)

0

1000

2000

3000

4000

5000

6000

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08RMB/sqm

Average Transaction Price of Industrial Land

Industrial land

URBAN VIEW -9-

Urban Analysis——New Residential Market

1. Supply and Demand, Transaction Volume and Price

In August 2016, the city’s new commodity residential supply totaled 427,600 sqm, a

MoM decrease of 44.70% and a YoY decline of 44.90%; the transaction area totaled

1,870,000 sqm, up 42.29% MoM and 50.03% YoY. The transaction volume of new

commodity housing saw a significant increase in August, reaching a level only second

to that in March. By contrast, there were only 430,000 sqm of supply, making the

supply-demand ratio fall to 0.23. The transaction prices averaged RMB 424,750/sqm,

rising by13.70% MoM and increasing by 41.21% YoY.

0.00

50.00

100.00

150.00

200.00

250.00

15-8 15-9 15-10 15-11 15-12 16-1 16-2 16-3 16-4 16-5 16-6 16-7 16-8

sqmMonthly Supply & Demand for Commodity Housing

Supply area Transaction area

x 1

00

00

-15

-5

5

15

25

35

45

20,000

25,000

30,000

35,000

40,000

45,000

15-8 15-9 15-10 15-11 15-12 16-1 16-2 16-3 16-4 16-5 16-6 16-7 16-8

%RMB/sqm Average Transaction Price of Commodity Housing

MoM YoY Average transaction price

URBAN VIEW -10-

2. Hot Sections

Top 10 sections in terms of commodity residential transaction volume across the city in August 2016

Rank Section Supply Area

(sqm)

Transaction

Area

(sqm)

Average Transaction

Price

(RMB/sqm)

Turnover

(in RMB 100

million)

1 Zhujiajiao 53,613 114,954 23,459 26.97

2 Jiading New Town 31,942 99,251 31,579 31.34

3 Songjiang New Town 41,132 83,227 34,923 29.07

4 Zhaoxiang 38,233 78,913 31,256 24.67

5 Lingang New Town 9,735 65,480 21,061 13.79

6 Sheshan 44,966 65,293 29,836 19.48

7 Qingpu Town - 54,970 32,008 17.59

8 Huinan - 53,477 28,312 15.14

9 Jinshan New Town - 48,255 13,798 6.66

10 Xibeiqu - 47,642 22,562 10.75

Top 10 projects in terms of commodity residential transaction volume across the city in August 2016

Ran

k Project Name District Section

Transaction

Area

(sqm)

Average

Transaction

Price

(RMB/sqm)

1 The Parkway Xuhui South Shanghai

Railway Station 42,446 75,351

2 SIIC Shanghai Bay Qingpu Zhujiajiao 41,270 18,221

3 Shanghai Legend Pudong Yuanshen Yangjing 38,865 80,068

4 Riviera Palace Qingpu Zhaoxiang 33,917 26,848

5 CITIC Pacific

Zhujiajiao New Town Qingpu Zhujiajiao 30,713 25,887

6 Greenland Yicui Garden Songjiang Songjiang New Town 28,747 42,589

7 Sheshan Residence Songjiang Sheshan 26,710 28,125

8 Jing’an Prime Land Zhabei Pengpu Yonghe 25,847 84,940

9 Fragrance City Baoshan Gucun 24,123 36,578

10 The Phoenix Garden Jiading Nanxiang 22,690 35,964

URBAN VIEW -11-

3. Hot New Supply

Top 10 projects in terms of new commodity residential supply across the city in August 2016

Rank Project Name District Section

New Supply

Area

(sqm)

1 CITIC Pacific Zhujiajiao New Town Qingpu Zhujiajiao 53,613

2 Sublime Your Future Nanhui Zhoukang 39,405

3 Happiness Unlimited Qingpu Zhaoxiang 38,233

4 Greenland Century City Putuo Inner Putuo 36,221

5 Greenland Yicui Garden Songjiang Songjiang New Town 34,795

6 Dacheng Courtyard Jiading Jiading New Town 31,942

7 E18 Pudong Nanpu 31,722

8 Fragrance City Baoshan Gucun 30,848

9 ITG Top Mansion Songjiang Sheshan 29,836

10 City Oasis Baoshan Qilian 29,370

4. Transaction Structure

below 1m1%

100~1505% 150~200

9%

200~30019%

300~40016%

400~50012%

above 5m38%

Transaction Structure of Commodity Housing by Total Price, August 2016

below 702%

70-9025%

90-14544%

145-20013%

200-30013%

above 3003%

Transaction Structure of Commodity Housing by Area, August 2016

below 1m2%

100~15010%

150~20014%

200~30023%300~400

15%

400~5008%

above 5m28%

Transaction Structure of Commodity Housing by Total Price, July 2016

below 703%

70-9028%

90-14546%

145-20012%

200-3009%

above 3002%

Transaction Structure of Commodity Housing by Area, July 2016

m = million

URBAN VIEW -12-

By area, in August, the proportions of properties larger than 145 sqm increased across

the board. The proportion of properties with an area of 200-300 sqm saw the largest

increase, up 3.44 percentage points compared with last month.

Accordingly, by total price, the proportions of properties priced above RMB 3 million

rose across the board. The proportion of properties priced over RMB 5 million grew

by 9.51 percentage points compared with last month.

5. Inventory Change

As of end-August 2016, the city’s first-hand residential inventories totaled 44,415

units, down 15,051 units MoM. The rumor of new policy caused the panic purchase

and serious shortage of supply, resulting in the significant decline of inventories. The

inventories at the end of this month have reached the lowest point over the past three

years. The digesting period of inventories also shortened to 3.47 months.

30000

40000

50000

60000

70000

80000

90000

100000

Aug Dec Apr Aug Dec Apr August

UnitsChange of Shanghai Residential Inventory, Aug 2014～Aug 2016

URBAN VIEW -13-

Urban Analysis——Second-hand Residential Market

1. Transaction Volume and Price

In August, the city’s second-hand residential transaction volume totaled 507750 units,

increasing by 44.74% MoM and decreasing by 58.04% YoY; the average price signed on

the Internet was RMB 33,446/sqm, up 14.9% MoM and 33.25% YoY.

2. Transaction Volume by District

By district, all of the districts in Shanghai saw MoM increase ranging from 9.20% to

97.66% in transaction volume in August. Huangpu, Jing’an and Pudong were the top three

in terms of the growth of transaction volume. The growth of Jing’an and Huangpu were

higher than 95%. The MoM increases of all the suburban districts except Fengxian were

smaller than the average level of the city.

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

0

10,000

20,000

30,000

40,000

50,000

60,000

15-8 15-9 15-10 15-11 15-12 16-1 16-2 16-3 16-4 16-5 16-6 16-7 16-8 RMB/m2

Transaction Volume and Price of Second-hand Housing

Transaction volume (unit) Average transaction price (RMB/㎡)

Units

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Bao

shan

Ch

angn

ing

Ch

on

gmin

g

Fen

gxian

Ho

ngko

u

Hu

angp

u

Jing'an

Jiadin

g

Jinsh

an

Luw

an

Min

han

g

Nan

hu

i

Pu

do

ng

Pu

tuo

Qin

gpu

Son

gjiang

Xu

hu

i

Yangp

u

Zhab

ei

UnitsTransaction Volume of Second-hand Residential Housing by District, July vs August 2016

July August MOM

Average MoM

Growth

URBAN VIEW -14-

3. Hot Sections

Top 10 sections in terms of MoM increase in second-hand residential transaction volume in August 2016

Rank District Section No. of Units

Transacted MoM YoY

1 Luwan Middle Huaihai Rd. 60 200.00% 114.29%

2 Pudong Biyun 84 147.06% 12.00%

3 Songjiang Sheshan 51 131.82% 1600.00%

4 Fengxian Jinhui 161 120.55% 283.33%

5 Pudong Sanlin 988 114.78% 35.34%

6 Jing’an Jiangning Rd. 160 110.53% 17.65%

7 Fengxian Fengcheng 320 107.79% 492.59%

8 Pudong Huamu 636 106.49% 19.32%

9 Pudong Yangjing 388 105.29% 11.82%

10 Baoshan Dahua 307 104.67% 29.54%

4. VISS Base Price

According to the statistics of

VISS system, in August 2016,

the city’s mean of residential

quarters was RMB

46,097/sqm, up 5.8% MoM

and 46.25% YoY; the city’s

median of residential quarters was RMB 48,083/sqm, up 7.53% MoM and 50.63% YoY.

BS CN CM FX HK HP JA JD JS LW MH NH PD PT QP SJ XH YP ZB

July 2016 3.15% 2.17% 5.89% 2.33% 2.90% 1.57% 1.43% 3.68% 1.05% 1.83% 3.20% 2.52% 2.12% 2.40% 3.08% 4.28% 1.47% 3.71% 2.41%

August 2016 7.49% 4.23% 8.28% 8.01% 7.68% 2.94% 2.89% 10.63 10.04 3.87% 8.83% 8.28% 4.48% 5.50% 10.69 12.75 2.82% 7.13% 5.22%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%MoM Change of Base Price by District, July vs August 2016

Mean Median

URBAN VIEW -15-

By district, in August, all the districts saw increases of base price, ranging from 2.82% to

12.75%. The increases in suburban districts were much larger than those in central districts.

By section, in August, all of the 121 sections saw increase of base price. 17 sections saw

growth over 10%.

5. Transaction Structure

Top 5 sections in terms of increase Top 5 sections in terms of decrease

Middle Songjiang

Jinshan New Town

Songjiang New Town (East)

QingpuNew Town

Jiading Main Urban Area

20120 23800 18.29%

9917 11686 17.84%

26180 30455 16.33%

21353 24641 15.40%

21954 25285 15.17%

No ne

below 7042%

70-9023.61%

90-12018.47%

120-1509.87%

150-1802.62%

180-3002.93%

above 3000.50%

Transaction Structure Second-hand Housing by Area, August 2016

below 0.5m3.63%

0.5m~1m9.43%

1m~1.6m16.25%

1.6m~2m11.52%2m~3.3m

36.29%

3.3m~5m11.27%

above 5m11.63%

Transaction Structure of Second-hand Housing by Total Price, August 2016

below 7043.41%

70-9024.32%

90-12018.18%

120-1508.95%

150-1802.08%

180-3002.67%

above 3000.40%

Transaction Structure Second-hand Housing by Area, July 2016

below 0.5m4.61% 0.5m~1m

13.02%

1m~1.6m21.58%

1.6m~2m13.45%

2m~3.3m31.14%

3.3m~5m8.47%

above 5m7.73%

Transaction Structure of Second-hand Housing by Total Price, July 2016

m = million

URBAN VIEW -16-

By area, in August, the proportion of second-hand properties below 70 sqm saw a further

decrease of 1.41 percentage points. The proportions of properties larger than 90 sqm rose

across the board. The proportion of properties with an area of 120-150 sqm saw the largest

growth, namely, 0.92 percentage points.

By total price, the transaction proportions of second-hand properties priced below RMB 2

million declined by different extent; while the proportions of second-handed properties

priced over RMB 2 million increased across the board. The proportion of properties priced

RMB 2-3.3 million saw the most significant increase of 5.15 percentage points.

URBAN VIEW -17-

Urban Analysis——Retail / Office Market

1. Supply

1) Monthly Retail / Office Supply

The supply of both retail and office saw decrease. There were 166,000 sqm of office

properties and 100,000 sqm of retail properties supplied.

2) Retail / Office Supply by District

By district, Changning, Hongkou and Yangpu were the top three in terms of office

supply, with 41000 sqm, 29000 sqm and 26000 sqm supplied respectively. In retail

sector, Pudong played a leading role with 30000 sqm supplied, followed by Jinshan, with

17000 sqm supplied.

0

10

20

30

40

50

60

70

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08sqm

Trend of Retail / Office Supply

Retail property Office property

x 1

00

00

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Cha

ngn

ing

Fen

gxian

Hon

gko

u

Jiadin

g

Jinsh

an

Min

hang

Pud

ong

Putuo

Qin

gpu

Son

gjia

ng

Yan

gpu

Zha

bei

sqm

Retail / Office Supply by District, Aug 2016


x 1

00

00

URBAN VIEW -18-

2. Transaction Volume

1) Monthly Retail / Office Transaction Volume

Boosted by the transactions of hot projects, the office transaction volume reached 521000

sqm. The retail transaction volume was 201000 sqm, maintaining a stable upward trend.

2) Retail / Office TransactionVolume by District

By district, Putuo and Minhang had much larger transaction volumes than other districts

because of the hot projects in these two districts. 112000 sqm were traded in Putuo and

105000 sqm were traded in Minhang. In retail sector, Jiading had 42000 sqm transacted,

the highest across the city. Qingpu had 32000 sqm transacted, ranking the No. 2.

0

10

20

30

40

50

60

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08sqm

Trend of Retail / Office Transaction Volume


x 1

00

00

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Ba

osha

n

Ch

an

gn

ing

Ch

on

gm

ing

Fen

gxia

n

Ho

ng

kou

Hu

an

gp

u

Jiad

ing

Jinsh

an

Jing

'an

Min

ha

ng

Pu

do

ng

Pu

tuo

Qin

gp

u

So

ng

jian

g

Xu

hu

i

Ya

ng

pu

Zh

ab

ei

sqm

Retail / Office Transaction Volume by District, Aug 2016


x 1

00

00

URBAN VIEW -19-

3. Transaction Price

In August, the average price of office properties rebounded to RMB 28,552/sqm, mainly

attributed to the transaction rally of high-priced project in the downtown; while the

average price of retail properties fell to RMB 21,895/sqm as middle- to low-end projects

dominated the transaction market.

4. Inventory Change

In August, the office transaction saw significant rebound again and the new supply saw

decrease, leading to a supply-demand ratio of 0.32. Hence, the office inventories at the

end of this month fell to 8,739,800 sqm. The retail supply also declined in this month but

its transaction failed to see remarkable growth. As a result, the retail inventories further

increased to 10,274,400 sqm.

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

15/08 15/09 15/10 15/11 15/12 16/01 16/02 16/03 16/04 16/05 16/06 16/07 16/08RMB/sqm

Trend of Average Transaction Price


400

500

600

700

800

900

1000

1100

sqm

Monthly Change of Retail / Office Inventory


x 1

00

00

URBAN VIEW -20-

Cost of Construction Materials

Prices of steel, cement, yellow sand and commodity concrete in August 2016

No. Material name July 2016 August 2016 Increase or decrease

1 Wire price (Φ8mm) (RMB/ton) 2,643.97 2,748.23 3.79%

2 HRB400 rebar (18mm) (RMB/ton) 2,389.90 2,580.16 7.37%

3 HRB400 Rebar (25mm) (RMB/ton) 2,408.10 2,600.16 7.39%

4

Ordinary Portland cement (strength grade 42.5)

(RMB/ton)

293.23 319.68 8.27%

5 Yellow Sand (medium-coarse) (RMB/ton) 57.10 58.97 3.17%

6

Pump Concrete C30 (particle size 5-25)

(RMB/m³)

341.74 346.13 1.27%

URBAN VIEW -21-

Construction Cost Analysis Indicators

I Project Summary

Project name Teaching Building of XX Primary School GFA 9955.51 m2

Project location Beyond the Outer Ring Road–Songjiang

District Height 18.9 m

Structure type Comprehensive educational properties for

primary school Total floors 4 floors aboveground

Function University Student Dormitory Method of

charging

2008 Quota valuation

Prices selected from

2013.05-2014.12

II Construction Cost Indicators

No. Item Total cost (RMB) Index per sqm

(RMB/m2) Percentage

Cost for engineering &

installation 26,346,100 2,646.38 100.00%

I Engineering works 12,253,300 1,230.81 46.51%

1 Soil (Stone) works 220,400 22.14 0.84%

2 Piling & foundation 1,811,700 181.98 6.88%

3 Masonry 851,600 85.54 3.23%

4 Concrete and rebar

concrete 6,097,600 612.48 23.14%

5 Roofing & waterproofing 1,040,200 104.48 3.95%

6

Anti-corrosion,

insulation, thermal

insulation

2,231,800 224.18 8.47%

II Decoration works 6,161,300 618.88 23.39%

1 Ground & floor 1,962,000 197.08 7.45%

2 Doors & windows 1,069,800 107.46 4.06%

3 Cylinder & wall 1,400,000 140.63 5.31%

4 Ceiling 315,900 31.73 1.20%

5 Paints, coatings, wall

paper 1,413,600 141.99 5.37%

III Installation works 2,022,600 203.16 7.68%

1 Electrical Engineering 1,582,600 158.97 6.01%

2 Water supply & drainage 440,000 44.20 1.67%

IV Measure fees 3,992,200 401.00 15.15%

V General contractor

service fees 10,000 1.00 0.04%

URBAN VIEW -22-

VI Government gees 1,060,200 106.49 4.02%

VII Taxes 846,500 85.03 3.21%

Shanghai Urban Construction Cost Consulting Co. Ltd.


URBAN VIEW -24-

Home-purchase restriction stages a comeback in second-tier cities?

As of 1st July, Hefei City started to enforce differentiated policy of home loans. On 9th

August, the lending policy was further tightened. On 11th August, Suzhou and

Nanjing announced new real estate policies nearly at the same time. Nanjing lifted the

down payment requirement of second homes and Suzhou promulgated new

restrictions on home purchase. On 31st August, Wuhan released restrictive measures

for lending and then Xiamen issued home-purchase restriction, becoming the second

second-tier city enforcing restrictive policy on home purchase. In the two months,

there have been five second-tier cities tightening policies on real estate, two of which

re-enforced home-purchase restriction.

URBAN VIEW -25-

Urban View:

Shao Minghao

Project Director

Shanghai Urban Real Estate Appraisal Co., Ltd.

Transactions and prices increased in first- and second-tier cities and inventories were

slowly digested in third- and fourth-tier cities, which remained on the real estate

market of 2016. As the home-purchase restrictive policy remained tight in first-tier

cities, the second-tier cities which had cancelled home-purchase restriction became a

hot cake. Provisional capitals, such as Wuhan, Hefei, Nanjing, witnessed the birth of

land king frequently, where the average prices of first-hand commodity housing were

among the top nationwide. To stabilize the real estate market, local governments

followed first-tier cities to enforce home-purchase restriction or home-loan restriction.

You may wonder whether the home-purchasing capital will go to third- or fourth-tier

cities or go to other real economies. I think both of them were of small possibility.

The reason lies in that all the best human resources and properties concentrate in large

cities and megacities. It is safest to purchase assets in these cities. In cities, real estate

is almost the only choice of various capitals. From this point of view, the

home-purchase restriction and home-loan restriction in key second-tier cities may fail

to prevent capital from entering the local real estate market but will enlarge the

negative effect of market-oriented economy.

Such palliatives also cannot bring much positive effect on the sound development of

local land and real estate market. We should realize that in quite a long time, there

remain the deference between urban areas and rural areas and the difference between

cities of various sizes in China. The gathering of high-quality labor, capital and

property in cities and high-level cities is a natural trend, which cannot be prevented by

human. The three major metropolitan regions – Bohai Rim, Yangtze River Delta and

URBAN VIEW -26-

Pearl River Delta – are established by long-time efforts of the state government. Now

that we cannot prevent the natural trend, why not let it be, strive to develop the three

metropolitan regions and enable their radiation to more urban and rural areas. We can

also optimize the structure in city agglomeration. For example, Beijing moves its

administrative sub-center out to other city so that it can reduce its development

pressure and drive the joint development of brother cities. The joint development in

the metropolitan region can make many high-quality labor, capital and properties be

shared. In this way, even the surplus capital will not concentrate in some specific

cities and cause the skyrocketing home prices in first- and second-tier cities as well as

the sluggish of real estate market in the third- and fourth-tier cities nearby.


URBAN VIEW -28-

Exploration of the classified evaluation of intensive

land use in development zones

Brief introduction of the existing evaluation system of intensive land

use in development zones

In 2008, China started the first round of evaluation of the intensive land use in

development zones, and updated the evaluation results every two years in the

following years. The fourth round of evaluation of the intensive land use in

development zones was launched in 2014. Now, there have been relatively

well-established working procedures and evaluation system for development zones.

The details can be found in Rules for the Evaluation of Intensive Land Use in

Development Zones (for Trial Implementation in 2014) (hereinafter as the “Rules”).

The Rules classify development zones into “industry-city integrated development

zones” and “industry-oriented development zones”, with different evaluation

indicators and weight ranges.

The adjusted indicators and weight ranges for “industry-city integrated development

URBAN VIEW -29-

zones” and “industry-oriented development zones” are showed in table 1 and table 2.

Table 1 Evaluation indicators and weight ranges for industry-city integrated development zones

Objective Weight Range Sub-objective Weight Range Indicator

Land-use

Status 0.60-0.65

Land-use degree 0.40-0.45 Land supply ratio

Land completion ratio

Land-use intensity 0.55-0.60 Overall plot ratio

Building density

Land-use

Efficiency 0.25-0.35

Overall land-use

efficiency 1.00

Overall tax revenue per parcel

Population density

Administration

Performance 0.08-0.12

Land-use supervision

performance 1.00 Vacancy rate of land

Table 2 Evaluation indicators and weight ranges for industry-oriented development zones

Objective Weight

Range Sub-objective

Weight

Range Indicator

Land-use

Status

0.70-0.75



Land-use structure 0.20-0.27 Industrial land ratio

Land-use intensity 0.50-0.57

Overall plot ratio

Building density

Overall plot ratio of

industrial land

Coefficient of building

occupation on industrial land

Land-use


Input-output efficiency of

industrial land 1.00

Fixed asset investment

intensity of industrial land

Tax revenue per industrial

land parcel

Administration



performance 1.00 Vacancy rate of land

URBAN VIEW -30-

Shortcomings of the existing evaluation system of intensive land use

in development zones

1. The indicator design fails to reflect the requirement for the conformity of land-use

structure with the planning and positioning of development zones

To maximize the land-use value of a region or city, there must be a plan integrating

the economic development, industrial development and ecological environment of this

region or city. As an important part of a region, development zone shall conform to

the regional master plan and land-use plan, which is quite critical for the intensive use

of land. Therefore, the evaluation system of intensive land use in development zones

shall evaluate whether the land use in development zones conforms to the plans.

However, the existing evaluation system fails to reflect the requirement for the

conformity of land-use structure with the planning and positioning of development

zones.

2. The indicator and weight design fails to be combined with development zone

administration in different development periods

Generally speaking, the life cycle of a development zone includes four periods: initial

period, expansion period, maturity period and adjustment period. In each period, the

content of intensive land use and the administration emphasis of land use are

different. For example, for a development zone in initial period or maturity period, its

land-use status and land input-output efficiency are obviously different and the

administrator’s focus is also different. Therefore, it is improper to use the same

indicator and weight design for different periods.

Considering the two aspects above, we can adopt classified evaluation of intensive

land use in industry-oriented development zones according to development periods,

on the basis of existing classification as well as the development features and land

administration focus of development zones in different periods.

URBAN VIEW -31-

Features and land administration focus of development zones in

different development periods

1. Features of development zones in different development periods

1) Initial period: Initial period is also the establishment period of a development

zone. The government delimits a certain area, formulates related policies,

organizes construction of infrastructure, and attracts investment and businesses

according to the need of regional or city’s social and economic development. The

feature of land use in this period is the prior construction of infrastructure.

2) Expansion period: A development zone uses the resources and policy advantages

accumulated in the initial period to further attract external resources. The

development and construction of industrial land gradually speed up. The single

industrial function of the development zone is gradually expanded. The

development zone shapes up step by step, laying foundation for its maturity

period.

3) Maturity period: After the rapid development in expansion period, the

development zone is gradually mature. The construction of the land within the

development zone has basically been completed. The profitability of enterprises

in the development zone also stays at a relatively stable level. At maturity stage,

the development zone pays more attention to the output performance of land and

the need of zone expansion. According to the past experience, a development

zone shall take 15 to 20 years from its establishment to maturity.

4) Adjustment period: The development of region and city are under an ever

changing social and economic environment. Therefore, the planning and

positioning of development zone will also be adjusted according to the change of

environment. Then, the focus of development zone will shift from expansion to

exploitation of potential and efficiency, and the development zone will start

paying attention to the ecological environment and sustainable development to

achieve intensive development. In adjustment period, the development zones

URBAN VIEW -32-

which do not conform to the regional master plan and positioning and have poor

land output performance will be transformed and re-built; the development zones

which conform to the regional master plan and positioning and have stable land

output performance shall pay more attention to exploiting the potential of

inventory land.

2. Land administration focus of development zones in different periods

For development zones in initial and expansion periods (including new expansion part

of mature developments and overall transformed and re-built development zones)

(hereinafter referred to as “type I development zones”), the focus of administration

includes whether these development zones develop and supply land in strict

accordance with the master plan and regulatory plan of land use; the dynamic change

of land that has been approved but has not been expropriated, or that has been

expropriated but has not been supplied, or that has been supplied but has not been

used; whether the developer develops and constructs in strict accordance with the

approved plot ratio, building density, investment in fixed asset per area and other

indicators in the granting contract. For development zones which conform to the

regional master planning and positioning, are well-developed and enjoy stable land

output performance (hereinafter referred to as “type II development zones”), the focus

of administration includes the output performance of various developed land parcels

and the exploitation of the potential of idle and inefficiently-used inventory land.

URBAN VIEW -33-

Suggestions for evaluation indicators and weight ranges in different

periods

Table 3 Evaluation indicators and weight ranges for type I development zones

Objective Weight

Range Sub-objective

Weight

Range Indicator

Land-use Status 0.70-0.75

Land-use degree 0.30-0.35

Land development ratio

Land supply ratio


Land-use structure 0.20-0.27 Accordance ratio to plan


Overall plot ratio of

industrial land

Coefficient of building

occupation on industrial

land

Land-use


Input-output efficiency of

industrial land 1.00

Fixed asset investment

intensity of industrial land

Tax revenue per industrial

land parcel

Administration



performance 1.00 Contract performance ratio

Table 4 Evaluation indicators and weight ranges for type II development zones

Objective Weight

Range Sub-objective

Weight

Range Indicator

Land-use

Status 0.50-0.65



Land-use structure 0.20-0.27 Accordance ratio to plan


Overall plot ratio

Building density

Overall plot ratio of industrial land

Coefficient of building occupation

on industrial land

Land-use


Input-output

efficiency of

industrial land

1.00

Fixed asset investment intensity of

industrial land

Tax revenue per industrial land

parcel

Administration


Land-use

supervision

performance

1.00

Vacancy rate of land

Disposal ratio of vacant and

inefficiently-used land


URBAN VIEW -35-

Policy: Agricultural department of Ministry of Land and Resources:

special permanent protection of capital farmland

On 4th August, Ministry of Land and Resources and Ministry of Agriculture released

Notice on Demarcating Capital Farmland for Permanent Special Protection, which

defines the significance, principles of demarcating capital farmland and requirements

on strengthening special protection.

Urban View:

Why does our government

pay so much attention to this

field? The core reason lies in

that the size and quality of

capital farmland are related

to the country’s food security.

Food, as a kind of strategic

material, concerns the social

stability of China, which has

a population of 1.3 billion people.

Some people think megacities, such as Beijing, Shanghai, should not establish

permanent protection of capital farmland or should establish as less as possible.

However, according to the experience of developed countries, there is a pattern of

“city + nature”. None of Bohai Rim, Yangtze River Delta and Pearl River Delta, the

three major metropolitan areas, is enclosed or covered by large-sized nature. As a

result, environment pollution and flood frequently occur in the cities of these areas.

Certainly, to achieve the pattern of “city + nature” requires forward-looking master

plan, which can break the geographic limitation of administrative regions. The plan

shall involve multiple cities, in the form such as “development plan of Yangtze River

Delta”. Nature shall be considered as an essential part of the plan, and thus permanent

protection of capital farmland can be implemented more effectively, and big cities will

be more ecological and more beautiful.

URBAN VIEW -36-

Policy: Authorities strengthens brokerage industry administration

On 17th August, Ministry of Housing and Urban-Rural Development, together with

National Development and Reform Commission, Price Bureau, Communications

Administration, Administration of Industry and Commerce, China Banking

Regulatory Commission, the People's Bank of China and Administration of Taxation,

issued a normative document for the brokerage industry. The document draws the

bottom line for the engagement, charge and ownership transfer in property

transaction, marking an important step towards the standardized development of

brokerage industry in China.

Urban View:

The highlights of the document

include:

1. Many departments are

involved. As the transaction of

property involves many fields,

the cooperation of multiple departments is required. The power of the authorities

alone is not enough to standardize of brokerage industry. Only the cooperation of

multiple relevant departments can have good effect. 2. The content is detailed. This

document points out the problems of the brokerage industry and offers solutions by 16

categories. 3. Great difficulty of implementation. As a national policy, it involves

many parties and fields. Moreover, the development status of real estate market varies

by city. Whether the policy can be effectively implemented is a question. If the policy

can be effectively implemented, it will bring significant influence on the brokerage

industry. For the interior of the industry, the new policy will greatly increase the

operating cost of brokerage agencies, give large agencies greater advantage,

accelerate the resource integration within the industry, and eliminate unscrupulous

small agencies. For the exterior of the industry, the regulation under the policy will

help rebuild the transparent, impartial and efficient image of brokerage industry,

contributing to the transaction market of inventory housing.

URBAN VIEW -37-

Finance: Half-year review of developers’ performance: growth of

profit ratio slows down and asset-liability ratio drops Many real estate developers, including Evergrande, Country Garden and Longfor,

have raised their sales target for this year. The increase was about 20%. The

adjustment of Evergrande was the largest, namely 50%, from RMB 200 billion to

RMB 300 billion. By the mid of 2016, the liabilities of 142 A-share listed developers

totaled RMB 4.28 trillion, rising by 10.79% compared with the end of last year.

Urban View:

Despite the significant

growth of sales in this

year, the net operating

profit of developers still

showed decline. Following

the decrease to below 10%

in 2015, the median of net

operating profit saw a

further decline to 7.6% in

the first half of this year;

the gross profit ratio was 30%, down by 2.69% percentage points. The significantly

increasing cost of acquiring land has great influence on developer’s profit.

Cooperative purchase or cooperative development can reduce some risk caused by the

high price of land, but the net profit share belonging to the parent company will also

fall. The profit ratio of real estate developers does not increase in accordance with the

flourishing market, which indicates that the overall profit ratio in the future will not

be as satisfactory as before.

URBAN VIEW -38-

Market: Draft of Shanghai Master Plan 2016-2040 publicized The Shanghai Municipal Government's Information Office held a press conference on

August 22 to give details on the city's master plan for 2016-2040. Based on the actual

conditions of Shanghai, the plan learned from the experience of other international

cities to build a framework of “target –

strategy – indicator”, focusing on

transportation, industry, housing and public

service, space quality, and environment

from five parts and eight chapters.

Urban View:

The new master plan has great guiding

significance for each industry, especially

the real estate sector.

1. Land and population control: The master plan continues tightening the upper limit.

Although the population is planned to be controlled at zero growth from 2020 to

2040, the construction land is planned to see negative growth, which will bring

positive effect on the short supplied real estate market. Notably, despite the zero

growth of total population in the future twenty years, the structure may witness

significant changes. The affordability of Shanghai’s housing consumer group will be

stronger as low-income consumers will be replaced by more high-income consumers.

2. Re-establishment of location value: The master plan breaks the long-established

value zoning of downtown, suburban area and exurban area. Through a four-level

structure of central zone, city sub-center, local center and community center, it will

make the development and resource allocation of all the districts and all the ring roads

more balanced.

3. Well-developed housing system: The master plan sets forth an affordable and

sustainable housing system. The housing system based on commodity housing and

home-purchase will shift to a housing system supplying to multiple levels and

meeting personalized demand. People’s focus will also change from home price to

overall housing cost. Minimizing people’s housing cost with efforts in multiple

aspects is the ultimate target of building an affordable and sustainable housing system.

URBAN VIEW -39-

Market: Real estate market boom under policy rumor

At the end of August, the rumor of tighter regulation directly stimulated the

transaction volume to exceed 900 units in two working days. On August 29, the

signed transaction volume of new homes in Shanghai reached 1689 units. Many

couples even divorced in order to buy a home. On August 30, the number of

transacted new homes rose to 2139 units.

Urban View:

The rumor of tighter

regulation was widely

reported and speculated,

causing a great clamor

and surge of

transactions. But it is

essentially an outburst

of strong potential

demand under this opportunity. In the situation where land price and home price keep

rising under mutual support, the purchaser’s desirability of investment has been much

stronger. Currently, the upward trend of home price is not caused by the exaggeration

of brokers or developers. The rise of home price is a result of the increase of luxury

property transactions as well as the land king effect on new projects in suburbs.

However, what makes the market worry is the long-term short supply of commodity

housing in Shanghai. The residential inventories have greatly declined while the

transaction volume stayed at a high level. The digestion period is expected to be

shorter than 5 months.

URBAN VIEW -40-

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integrated analysis and only for reference. We do not take any legal responsibility

for its accuracy.

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