Mounting concerns over inflation and stock market volatility help bolster demand
Peggy Sito and Sandy Li 24 June 2009
Luxury residential properties across major mainland cities have been widely sought after by both investors and wealthy end-users in the past two months, say property agents.
The resurgence of demand has been triggered by mounting concerns over inflationary pressures, growing confidence in the market outlook, an increase in property buying by foreigners, and stock market volatility that has prompted a flight to the relative safety of property assets.
“Compared with three to four months ago, the landscape of the high-end segment has undergone a profound change in supply-demand dynamics,” said Nomura International (Hong Kong) senior property analyst Lee Wee Liat.
“As the market recovery story continues to play out, optimistic sentiment has spilled into the high-end market.”
But while data shows that luxury home prices in major cities have risen between 10 and 20 per cent on average since the beginning of the year, the jump in prices was not likely to prompt the government to put the brakes on demand any time soon, said analysts.
In Shanghai, the country’s financial hub, sales of homes worth 40,000 yuan (HK$45,425) per square metre and above soared last month to 182 units from 20 in April.
In the first 15 days of this month, an additional 107 units worth more than 40,000 yuan per square metre changed hands, according to property agent E-House China.
Last month, Shui On Land sold 57 units at Block 11 of Casa Lakeville at an average of 60,000 yuan per square metre, and Tomson Group said it recently sold five units in Tower C at Tomson Riviera in Shanghai in one day. Before that, only four other units at the development had been sold since 2005, according to government registration figures.
The average price for Tower C units was 110,000 yuan, according to mainland media.
In Hangzhou, last month’s sales of detached houses doubled to 101. Prices for detached houses of more than 280 sq metres are up some 10 per cent on average since January.
A similarly rosy picture was also shown in Beijing, where 722 villas were sold last month, a rise of about 90 per cent from April.
In Shenzhen, Overseas Chinese Town, a high-end developer, sold out all seven of its villas in the project Tian Lu at an average of 120,000 yuan per square metre in one day.
In Guangzhou more than 3,000 units priced at 2 million yuan or above were sold in May.
The robust sales indicated that the role of quality real estate as a hedge against looming inflationary pressure had resurfaced, boosting demand for high-end property, said Huang Tao, a project manager at Centaline’s Guangzhou office.
Growing concern over the looming inflation had been widely reported in the media and this had helped the market to lure more cash from investors and rich end-users, Mr. Huang said.
Raymond Ko, a director at Midland China’s Shanghai office, said investors from Wenzhou and other provinces were actively looking for investment alternatives after strong gains in the stock market.
Strong land sales have also bolstered property buyers’ confidence.
Last month, Guangzhou R&F Properties acquired a 32,300 sq metre site at Guang Qu Men Wai Street in the Fourth Ring Road area for a higher than expected 1.02 billion yuan or 14,097 yuan per square metre.
Guangzhou Investment, the property arm of the city government, yesterday acquired the last residential site in the core business district for 345 million yuan or 15,324 yuan per square metre, 358 per cent higher than the price paid for a previous site sold in the area in 2005.
Li Wenjie, a general manager at Centaline (China) in Beijing, said luxury home prices were now 15 per cent higher than during the market’s bottom in January this year.
In Hangzhou, property agents said an increasing number of investors had bought villas and detached houses after seeing property prices stabilise since April. “That trend became more obvious in May,” said Jacky Chiu, a director at Centaline China’s Hangzhou branch.
Prices in Hangzhou have rebounded 20 per cent from early this year, returning to the 2007 level. Developers have stopped offering incentives or price cuts since April.
Jimmy Fong Man-bun, a deputy senior director of Savills (Hong Kong), highlighted the growing interest from foreign buyers.
Mr. Fong said prices of luxury homes were expected to rise 20 to 30 per cent if restrictions on foreign buyers who must work in Shanghai for one year were lifted.
Mr. Li of Centaline China agreed. The government’s moves to ease restrictions on foreign property buyers would help the luxury market in particular, he said.
He said the present mood of optimism in the industry could last through the second half of the year, although there are uncertainties such as possible policy changes to control the market if prices continue to rise too fast.
2 comments:
Mainland luxury home prices surge
Mounting concerns over inflation and stock market volatility help bolster demand
Peggy Sito and Sandy Li
24 June 2009
Luxury residential properties across major mainland cities have been widely sought after by both investors and wealthy end-users in the past two months, say property agents.
The resurgence of demand has been triggered by mounting concerns over inflationary pressures, growing confidence in the market outlook, an increase in property buying by foreigners, and stock market volatility that has prompted a flight to the relative safety of property assets.
“Compared with three to four months ago, the landscape of the high-end segment has undergone a profound change in supply-demand dynamics,” said Nomura International (Hong Kong) senior property analyst Lee Wee Liat.
“As the market recovery story continues to play out, optimistic sentiment has spilled into the high-end market.”
But while data shows that luxury home prices in major cities have risen between 10 and 20 per cent on average since the beginning of the year, the jump in prices was not likely to prompt the government to put the brakes on demand any time soon, said analysts.
In Shanghai, the country’s financial hub, sales of homes worth 40,000 yuan (HK$45,425) per square metre and above soared last month to 182 units from 20 in April.
In the first 15 days of this month, an additional 107 units worth more than 40,000 yuan per square metre changed hands, according to property agent E-House China.
Last month, Shui On Land sold 57 units at Block 11 of Casa Lakeville at an average of 60,000 yuan per square metre, and Tomson Group said it recently sold five units in Tower C at Tomson Riviera in Shanghai in one day. Before that, only four other units at the development had been sold since 2005, according to government registration figures.
The average price for Tower C units was 110,000 yuan, according to mainland media.
In Hangzhou, last month’s sales of detached houses doubled to 101. Prices for detached houses of more than 280 sq metres are up some 10 per cent on average since January.
A similarly rosy picture was also shown in Beijing, where 722 villas were sold last month, a rise of about 90 per cent from April.
In Shenzhen, Overseas Chinese Town, a high-end developer, sold out all seven of its villas in the project Tian Lu at an average of 120,000 yuan per square metre in one day.
In Guangzhou more than 3,000 units priced at 2 million yuan or above were sold in May.
The robust sales indicated that the role of quality real estate as a hedge against looming inflationary pressure had resurfaced, boosting demand for high-end property, said Huang Tao, a project manager at Centaline’s Guangzhou office.
Growing concern over the looming inflation had been widely reported in the media and this had helped the market to lure more cash from investors and rich end-users, Mr. Huang said.
Raymond Ko, a director at Midland China’s Shanghai office, said investors from Wenzhou and other provinces were actively looking for investment alternatives after strong gains in the stock market.
Strong land sales have also bolstered property buyers’ confidence.
Last month, Guangzhou R&F Properties acquired a 32,300 sq metre site at Guang Qu Men Wai Street in the Fourth Ring Road area for a higher than expected 1.02 billion yuan or 14,097 yuan per square metre.
Guangzhou Investment, the property arm of the city government, yesterday acquired the last residential site in the core business district for 345 million yuan or 15,324 yuan per square metre, 358 per cent higher than the price paid for a previous site sold in the area in 2005.
Li Wenjie, a general manager at Centaline (China) in Beijing, said luxury home prices were now 15 per cent higher than during the market’s bottom in January this year.
In Hangzhou, property agents said an increasing number of investors had bought villas and detached houses after seeing property prices stabilise since April. “That trend became more obvious in May,” said Jacky Chiu, a director at Centaline China’s Hangzhou branch.
Prices in Hangzhou have rebounded 20 per cent from early this year, returning to the 2007 level. Developers have stopped offering incentives or price cuts since April.
Jimmy Fong Man-bun, a deputy senior director of Savills (Hong Kong), highlighted the growing interest from foreign buyers.
Mr. Fong said prices of luxury homes were expected to rise 20 to 30 per cent if restrictions on foreign buyers who must work in Shanghai for one year were lifted.
Mr. Li of Centaline China agreed. The government’s moves to ease restrictions on foreign property buyers would help the luxury market in particular, he said.
He said the present mood of optimism in the industry could last through the second half of the year, although there are uncertainties such as possible policy changes to control the market if prices continue to rise too fast.
Post a Comment