In part due to the economic recession in Europe and the US, the new arrivals of manager level expatriates to Shanghai decreased quite a bit in the second half of 2013. Due to limited budget and higher living costs in Shanghai, most expats chose to renew leases in the third quarter, though most landlords slightly raised their rentals. During international school registration peak season, luxury shanghai villas leasing stayed active with a 2.1% increase in the average rent in the second half of 2013. Due to restricted tenant budget, some luxury shanghai serviced apartments faced high vacancy rates and are now offering short term stays or daily rates in order to try to maintain the occupancy rate.
Shanghai apartment rents dropped to an average of RMB146.2 per sqm per month, down 1.5% year-on-year (YoY). While overall occupancy rates rose to 92.7%, increase by 0.5% YoY. Shanghai villa rents rose by 0.5% YoY to RMB 137.6 per sqm per month, allowing occupancy rates to increase by 0.8% YoY to 87.5%.
While average rents RMB141.1 per sqm per month in Pudong and RMB127.4 per sqm per month in Puxi. Shanghai service apartment rents fell 3.3% to RMB 246.7 per sqm per month, while occupancy rates decreased by 1.6% to 89.8%. Overall residential rents fell by 0.4% YoY while city-wide occupancy rates fell 1.1% YoY in 2H2013.
Several luxury projects opened in the second half of 2013, relaxing the tight luxury home supply in the downtown and Lujiazui CBD areas. One of which, the Bund Residence located in the riverside area of Huangpu, opened in the third quarter, bringing 212 serviced apartments sized between 73sqm (one-bedroom units) and 305sqm (four-bedroom units) to the market. Lanson Place Jinlin Tiandi was fully returned to the market in Q4 of 2013. The project features units with more contemporary fit-outs than before the renovation. Additionally, Times Square Apartments on Huaihai Road re-opened in early Q4 of 2013, adding 131 units to the Shanghai apartment market.
Some expat assignments were postponed in Q3 of 2013 as new visa regulations were put into place which potentially caused demand to spill over to the fourth quarter. However, demand from multinational corporations remained flat to weak through to 2014 as the holiday season was upon us (Christmas and Chinese New Year) approaching.
