Units in the upmarket development in the Qing Pu district will be offered at three million yuan and above, or between 12,000 yuan and 15,000 yuan per square metre.

About half the size of the 400,000 square metre West Kowloon cultural district site, the Art Centre occupies a site area of 200,000 square metres. It comprises 280 villas and townhouses of between 229 and 560 square metres, which are scheduled to be delivered to buyers in June next year.

Charles Lai Zhichao, associate director for residential sales at Savills Property Services (Shanghai), the sole agent for the centre, said the first batch of townhouses and villas would be priced from 12,000 yuan to 15,000 yuan per square metre.

That would represent a discount of between 16 per cent and 25 per cent on the 16,000 yuan to 18,000 yuan per square metre prices quoted by Mr Lai earlier for nearby villa developments last month.

Mr Lai added that some villas were changing hands at 20,000 yuan to 22,000 yuan per square metre in the area, which has been attracting a growing number of expatriates since international schools from the United States, South Korea, Germany and Britain were built there.

Although Beijing had imposed restrictions on individual overseas homebuyers, Mr Lai said they could still secure approvals from the government if they provided more detailed information on their purchase plans. 'We will conduct an internal vetting for potential homebuyers. If we believe they are unlikely to obtain approval because of incorrect information or they are being subjected to certain special conditions, we will not accept their deposit,' he said.

In July last year, the central government announced that foreigners not residing in the mainland for at least a year would be restricted to buying a single self-use unit. So far, only Beijing strictly adheres to the policy, while other cities including Shanghai have not yet fully implemented the regulation.

Last week, the Shenzhen government announced that Hong Kong families would be allowed to buy more than one home as long as they use different names or passport documents for the purchases, and can prove they need the extra units for self-use.

Since the Arts Centre is the first development based on a 'creative property concept' that has been released for sale in Shanghai, the developer will offer a select number of villas at competitive prices to test the waters.

'For promotional purposes we will price some villas at below market transaction prices,' said Mr Lai.

The villas would be offered as 'bare shells' - without pillars and internal walls - based on the likely requirements of target customers who are expected to be mostly painters, sculptors, architects and people involved in creative industries and who would like more flexibility in layouts and to be able to change designs, said Mr Lai.

'A painter will look for a 10-metre long wall for wall painting or a sculptor may prefer higher ceilings to create a studio. So these buyers can design and re-arrange the floor plans in order to create their dream house,' he said.

The development, about 40 minutes by car from central Shanghai, will feature an art centre for hosting exhibitions; museums; recreational clubs; an art trading centre for auction of art works; a retail complex and a resort hotel. It will also have a 43,000 square metre man-made lake with 17 lakeside villas.