China’s premium real estate market is in the midst of a recovery phase despite the gloomy mood on the mass market. Two luxury projects in Shanghai were sold out shortly after their market launch over the weekend.
A package of 110 apartments in One Sino Park, developed by Sunac China Holdings, sold out within two hours of its launch on Saturday, fetching 5.7 billion yuan ($798 million). The project in Huangpu District, priced at 171,000 yuan per square meter (15,886 yuan per square foot), was subscribed almost twice as much before its launch.
In the nearby Putuo district, Yuexiu Property’s Suhe Grand Mansion also sold all 124 apartments on offer on Saturday and, despite a price per square meter of 103,570 yuan, was able to record 350 prospective buyers before the start of sales. The average price for new houses sold in Shanghai in July was 64,466 yuan per square meter, according to real estate information provider Fang.com.
The successful sales continue the trend of robust development of luxury properties this year, despite the country’s struggling real estate sector. Homebuyers purchased 1,544 luxury homes priced above 30 million yuan in Shanghai in the first half of the year, the highest in a decade, CRIC data showed.
Overall, China’s real estate market saw new home prices fall for the 14th consecutive month in July, and the country’s top 100 developers saw home sales fall 40 percent to 1.85 trillion yuan in the first six months, according to figures from China Real Estate Information Corp (CRIC).
In the first six months of this year, 20 of 23 premium residential projects in Shanghai – priced at over 100,000 yuan per square meter – sold more than 70 percent of their inventory at the time of launch, CRIC added.
But the strong development was not limited to Shanghai. A total of 500 luxury properties worth 20 million yuan or more changed hands in Beijing, Shanghai and Shenzhen in July, an increase of 28 percent year-on-year, according to Shanghai-based research and development institute E-house China.
The premium residential segment is the hottest real estate category. As an analysis by E-House shows, transactions here have increased for seven months in a row this year.
“The recovery of the luxury market sends a signal of recovery in the current cycle,” said Yan Yuejin, vice president of E-house. “However, the divergence between the luxury market and the mass market remains enormous. It also reflects the risk-averse sentiment of buyers, as premium residential projects always prove more resilient during market downturns.”
Increased supply of premium properties and lower prices from developers looking to clear their inventory quickly have led to a huge improvement in market sentiment, he added.
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“Robust sales in luxury projects will help developers’ balance sheets, and those with good transactions will continue to be the driving force in land acquisitions in the future,” he said.
One Sino Park also sold all 204 residential units of a quota offered in April. Together with Saturday’s results, the project has brought in 15.6 billion yuan.
Due to strong sales, Sunac announced that it will launch the remaining 158 units of the project in the fall. On Friday, the developer also began accepting subscriptions for another luxury project.
