Beijing's luxury home rental market is expected to warm up after the Chinese Lunar New Year.

 

Rents are expected to rise because of a decreasing vacancy rate, according to research conducted by the international real estate service provider DTZ Debenham Tie Leung.

 

This rental market covers hotel-serviced apartments, and top-notch apartments and villas, mainly targeting foreigners and Chinese people working for large multinational companies.

 

Alan Ngok, of the consulting firm's Beijing branch, believes that after the most important Chinese festival many foreign companies will expand their businesses and continue to send an increasing number of senior staff to China.

 

"Because they provide flexible leasing terms, full amenities and high-standard management, hotel-serviced apartments will remain in favor with overseas executives," said Ngok.

 

The supply of high-end apartments is expected to remain low in the early part of this year. Available units will mainly come from projects that started to be occupied in the second half of last year.

 

As these communities continue to mature, more tenants will be attracted. The average rental of an apartment will increase slightly with lower vacancies.

 

Meanwhile, a number of villas have been decorated this winter. They are expected to enter the market after March.

 

Villas are often the first choice of senior executives with families because they have gardens and are near to international schools.

 

Richard Wang, associate director with the research firm in Beijing, forecasted that the average rental price and occupancy rate for villas would rise this year.

 

The survey revealed that winter is typically the low season for leasing properties, thus the market experienced slight slowdown from last October to December. The average rental fee in the sector fell by 1.6 percent, with the vacancy rate up by 2.0 percent.

 

The vacancy rate for hotel-serviced apartments increased from 15.0 percent to 17.0 percent, so most landlords lowered rents to attract tenants.

 

Average rental prices in this sector decreased 1.8 percent to US$20.8 per month per square meter.

 

Ngok attributed the slowdown of the hotel-serviced apartment sector to the holiday season, when senior executives from multinational firms do not visit China as much.

 

For the high-end leasing apartment sector, new supply has been gradually absorbed by the market.

 

The occupation rate, however, was slower than expected. Furthermore, outdated furnishings in older projects have led to a fall in the number of clients.

 

New projects that have recently entered the villa leasing market with improved marketing strategies have attracted new tenants, but stiff competition has kept rents low.

 

The average rental fee for villas dropped 2 percent during the last quarter, or from US$18.4 per month per square metre to US$18.1 per month per square meter.

 

(China Daily January 25, 2006)