Developer jumps gun to beat cooling edict

PUBLISHED : Wednesday, 13 December, 2006, 12:00am
UPDATED : Wednesday, 13 December, 2006, 12:00am

With Shenzhen yet to restrict buying by foreigners, Gemdale's Gateway old town redevelopment will be launched before the end of January

Taking advantage of the fact that the Shenzhen government has not yet implemented restrictions on property buying by foreigners, a large developer is set to launch an old town housing redevelopment to tap Hong Kong capital early next year.

Shenzhen-listed Gemdale Corp plans to release the Gateway in Hong Kong and the mainland by the end of next month.

Sophia Tung Siu-ming, the marketing director of Gemdale, said the project was targeted at Hong Kong people and she expects about 70 per cent of sales to be to buyers from the territory.

The project is located east of Huanggang Port in Futian district and close to the new Futian port. The new port is scheduled for completion in the first half of next year.

The Gateway is scheduled for completion by the end of next year and will provide more than 2,200 flats. However, only 1,361 units will be sold publicly. The rest will be provided to people who own properties in the old town.

Owners of all units in the development will enjoy the same clubhouse and lobby entrance.

The units will range from 40 to 90 square metres each.

Ms Tung expects many Hong Kong people will be interested in the project, which she says has good capital growth potential.

'The average price of new residential projects in Futian has reached 15,000 yuan per square metre,' she said.

'We expect prices at the Gateway will be more than that in view of limited new supply in the district in the next few years.'

The planned launch was scheduled before any announcement by the Shenzhen government on implementing a central government directive to restrict property buying by foreigners.

The latest effort to cool speculation and hold down spiralling prices in the mainland property market was announced by Beijing in July.

Under the directive, foreigners and buyers from Hong Kong, Macau and Taiwan will only be able to buy a flat for their own use.

The Shenzhen government had not yet released the details of the restrictions and there was still some doubt whether Hong Kong people would fall under the restrictions, industry officials said.

Michael Choi, the chairman of Land Power International, said: 'The city government may impose tough restrictions on property buying by foreigners. That may add a risk factor to the buyers of the development, especially if they want to resell their units to foreigners in future.'

Alan Chiang, a director of City Integrated Residential Services, a member of surveyors firm DTZ Debenham Tie Leung, expects young local executives will also be potential buyers of the project in the secondary market.

'The secondary and leasing market in the district is active,' he said. 'Rentals for flats in the Gateway could reach 60 yuan per square metre. Buyers could also enjoy a rental yield of 6 per cent.'

Despite the latest attempts to take the heat out of the property market, Mr Chiang said prices in Shenzhen had continued to rise in the second of half of this year.

Property prices in Futian increased to between 13,000 and 14,000 yuan per square metre from 12,000 yuan last year, according to his research data.

Mr Choi said average home prices in Shenzhen had increased 8 to 9 per cent this year and he expects the market to perform positively next year on the back of strong demand.