China’s premium property market is in the midst of a recovery despite the gloomy mass market, as two luxury projects in Shanghai sold out soon after they were launched over the weekend.
A batch of 110 flats at One Sino Park, developed by Sunac China Holdings, sold out within two hours of launch on Saturday, pulling in 5.7 billion yuan (US$798 million). Located in Huangpu district, the project, priced at 171,000 yuan per square metre (15,886 yuan per square foot), was nearly double subscribed ahead of the launch.
In nearby Putuo district, Yuexiu Property’s Suhe Grand Mansion also sold all 124 flats it offered on Saturday, attracting 350 subscriptions before the launch despite a price of 103,570 yuan per square metre. The average price of new homes sold in Shanghai in July was 64,466 yuan per square metre, according to real estate information provider Fang.com.
The successful sales continue a trend of robust performance by luxury projects so far this year, despite the country’s downtrodden property sector. Homebuyers snapped up 1,544 luxury homes with prices above 30 million yuan in Shanghai in the first half of the year, the highest in 10 years, CRIC data showed.
Overall, China’s property market suffered the 14th consecutive month of decline in new home prices in July, and the country’s top 100 developers recorded a 40 per cent drop in home sales in the first six months to 1.85 trillion yuan, according to China Real Estate Information Corp (CRIC).
Over the first six months this year in Shanghai, 20 out of 23 premium residential projects – priced at more than 100,000 yuan per square metre – sold more than 70 per cent of their inventory on the launch date, CRIC added.
Nor has the strong performance been limited to Shanghai. A total of 500 luxury homes priced at 20 million yuan or more in Beijing, Shanghai and Shenzhen changed hands in July, a 28 per cent increase compared with a year earlier, according to Shanghai-based E-house China Research and Development Institute.
The premium residential segment is the hottest property category, with transactions growing for seven consecutive months this year, an analysis from E-house showed.
“The rebound in the luxury market sends a signal of recovery in the current cycle,” said Yan Yuejin, vice-president for E-house. “Still, the divergence between the luxury market and the mass market remains huge. It also reflects the risk-averse sentiment from buyers, as premium residential projects always demonstrate more resilience amid market downturns.”
An increase in the supply of premium properties, as well as lower prices offered by developers that want to clear their inventories quickly, have provided a huge boost to market sentiment, he added.
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“The robust sales for luxury projects will help developers with their balance sheet, and those with good transactions will also be the main force of buying land in future,” he said.
One Sino Park also sold all 204 units in a batch of flats it made available in April. Combined with the results on Saturday, the project has reaped 15.6 billion yuan.
Driven by the strong sales, Sunac said it plans to launch the project’s remaining 158 units in the fall. The developer also opened subscriptions for another luxury project on Friday.