The Deal on the CBD: Helen Chang of Beijing Residential at Savills

Contrary to popular stereotypes about the Shanghainese, Helen Chang of Savills has not just moved to Beijing, but embraced it. Her company’s Beijing headquarters overlook Beijing’s Central Business District (CBD) and Chang is the first to admit that this place has really grown on her during the past two years. Agenda sat down with Chang to better understand Savills’ residential operations in Beijing, the limitations of being a foreign-owned real estate company, and what the best places to invest are.

Tell us a little bit about your company. Our residential department is comprised of two divisions. Residential leasing and residential sales. The residential leasing division focuses on providing relocation services to the expatriates working for our corporate accounts, such as housing search, school search and city orientation. The residential onsite leasing and sales project team assists landlords with finding tenants for their apartments through our own source as well as by cooperating with 3rd party agents.
The residential sales division is focusing more on second hand sales in Central Park as well as the sales of luxury villas, such as Yosemite, Grand Hills in Shunyi area and other unique style villas in the western and eastern parts of the Beijing on behalf of overseas investors.
We also have an asset management team in Central Park. Once a client signs an asset managent contract with us, we conduct weekly inspections to make sure that the property is in good condition, and work with property management to take care of any problems. In the meantime, our leasing team will put their property on our list and introduce it to potential tenants. When the unit is rented out, we help them arrange payments and can even receive the payments on their behalf. And of course, we help them resolve any problems that arise.

You said your company is focusing on things other than sales due to current market conditions. How did you make that transition, and when do you think the market will recover? Contrary to other sales teams, we don’t pursue the biggest coverage on the sales market, but really want to target the high-end and good quality properties at this stage. Our sales team is small but very professional and it is this that differentiates us from our competi-tors. We are not only focused on closing the deal, but we also provide market analysis to our clients. We believe that ethics and professional conduct are the most important.
We do the property management for Central Park, Upper East Side and recently began doing it for Yintai Apartments. Our residential sales team works closely with our property management team to ensure the best quality service to our clients.
We provide our clients with a “total solution” package that includes property management and asset management service as well as on-site sales and leasing services, We saw sales transactions increasing in December, even though the govern-ment has issued a lot of regulations aiming to cool down the property market. The regulations were related to to property taxes, which made many buyers decide to buy before the new rules and regulations took full effect. In Beijing, we see that the price for second hand properties has increased, rather than the sales prices of new sales projects.

How often do regulations for property purchases change? Last year, I’d say the government announced new regulations quite frequently, about every two to three months. We discussed this with our Shanghai colleagues and we think that for the first half year of 2011 the market will be relatively stable and quiet, and that prices won’t increase too much. The government has made its message very clear: it wants to cool down the market. That being said, I do believe that prices will increase before the end of this year, perhaps anywhere between 15 and 20 percent. This has actually been said by other professional research institutes, such as Goldman Sachs, as well.

How do the markets in China’s two major cities compare with one another? Shanghai has definitely seen the biggest increases compared with Beijing, and prices for properties tend to be about one third higher than those in Beijing. In comparison to Shanghai, Beijing is actually quite stable. For luxury apartments in Shanghai, the average price is between RMB 80,000 and 110,000 per square meter. In Beijing, for the same quality properties, those figures are between RMB 60,000 and 80,000.

Is there a specific area you would tell people to invest in right now? Location is number one, of course. I think the CBD (East) is good, especially places like Central Park. In the beginning of 2010, the average price was RMB 42-50,000, but today the price has already risen to around RMB 55-70,000. Even though the price is expensive, its location in the heart of CBD and the opening of new office buildings like WFC and China World Phase III, will cause prices to go up.
Investors can also consider the surrounding areas outside the fifth ring road, such as Fangshan. In the future, investors are looking to develop this area with living and leisure facilities such as shopping malls. So the area has a lot of potential for investors , and properties out there are currently priced at around RMB 10,000-15,000 which is significantly cheaper than in the downtown area. Plus this area is already connected to the subway, and there are many developers looking to develop commercial properties, which are currently priced at around RMB 12-15,000 per square meter

How do you stay competitive? Due to the fact that we are an international company we have to adhere to strict rules and regulations, which means that in certain areas we can’t be as flexible as other smaller operations. Many developers from Hong Kong recognize the Savills brand, and they like to work with us. They know the procedures we follow, and agree to follow them as well. In Shanghai we have a big and successful sales team which is our Beijing sales team’s final target.
In Beijing, our strategy is to start selling second-hand properties and gradually gaining more experience on the local sales market. In the meanwhile providing sales consultancy services based on our China sales team expertise. We are also looking to extend our operations to other cities such as Tianjin, Qindao, Dalian, Shenyang – cities that also have a lot of potential – and we are confident that we can enter these markets in the near future.

What is the pay structure for people who want to use Savills for property sales? As for sales, owners can sign a sole agent agreement with Savills, which lasts about three to six months, and the fee is usually one percent. We then use all of our marketing efforts, including our newsletters and brochures, and arrange open houses to show the properties.This year we will also work to promote international properties within Beijing, and will help overseas developers promote their properties to local Chinese people.

What are some of the properties you work with, and what price range do they run in? We work with high-end properties located downtown, such as CBD area, Chaoyang area, etc. We work with serviced apartments such as Marriott Sandalwood and Lanson Place as well as individually owned properties such as Central Park and Fortune Heights. The prices for a one bedroom in Marriott Sandalwood is between RMB 15,000 to RMB 20,000 up to RMB 40,000 to RMB 45,000 for a 3 bedrooms apartment.
Central Park apartments start at RMB 7,000 for a studio, and run up to RMB 33-80,000 for a four bedroom apartment. The sales prices are between RMB 50,000 and 65,000 per square meter. In Fortune Heights, a two bedroom apartment starts at RMB 25,000 and larger apartments run up to RMB 70,000 and sale prices are between RMB 85,000 and RMB 165,000. In the Park Hyatt Residences, rental prices for a one bedroom apartment start at RMB 20,000 and the most expensive apartments are around RMB 55,000 per month. Sales prices run between RMB 55,000 per square meter and more than RMB 150,000, depending on the floor.
Our properties in Xanadu are for sale only, and range from RMB 58,000 to RMB 65,000, and the Millennium Residences, which are not for sale, rent from RMB 30,000 per month to RMB 47,000 per month. Lanson Place, which is located near Central Park, rents for between RMB 32,000 and RMB 95,000 per month. The Kerry Center, China World Apartments, and Frasier Suites rent for between RMB 18,000and RMB 39,000, RMB 18,000and RMB 52,000, and RMB 13,000 to RMB 36,000, respectively.

To learn more about Savills’ work in China, please visit www.savills-china.com.

Article from Agenda, issue 72, Jan 27-Feb 23. To read more from the most recent issue of Agenda, download the PDF here. To find a copy, contact our distribution department at distribution@agendabeijing.com with an idea of where you work, live or play and we'll tell you where you can find one near you.