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January 22, 2021

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Headwinds for serviced apartments

By Cao Qian | 00:05 UTC+8 January 22, 2021 | Print Edition

Shanghai鈥檚 serviced apartment market will continue to face headwinds this year despite a recovery in both vacancy rates and rents in the last quarter of 2020, according to international real estate services provider Savills鈥 latest research.

Citywide, the vacancy rate of serviced apartments declined 1.4 percentage points during the October-December period from the previous quarter to 14.8 percent, while rents edged up 0.4 percent quarter on quarter to an average monthly rate of 230.7 yuan  (US$35.6) per square meter, Savills鈥 data showed.

Year on year, vacancy rates declined 1.5 percentage points and rents fell 3.1 percent.

鈥淎s borders reopened at the end of the third quarter, the city experienced a notable fall in vacancy rate as tenants stranded overseas returned to their leases or signed new contracts,鈥 said Chester Zhang, director of Savills China research. 鈥淭his didn鈥檛 last, however, as border controls tightened significantly in mid-November.鈥

On the supply side, two projects opened in the last quarter of 2020, increasing the city鈥檚 total inventory to 9,969 units.

Greystar Real Estate Partners made its China debut by unveiling the 474-unit LIV鈥橬 833 near Zhongshan Park in Changning District while Zhongrong International Trust saw its 293-unit Riverdale Residences open near Century Avenue in Pudong.

Savills officials said the local serviced apartment market will be under pressure over the next 12 months amid tight border controls and travel curbs.

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