Supply shortage continues to drive up housing prices in several cities and hampers central government attempts to cool down the property market, writes Adam Main
Despite the central government's attempts to rein in the country's rapidly overheating property market, mainland housing prices are rising and will continue to do so as demand exceeds supply, experts say.
Riding on an economy that expanded 11.4per cent last year, housing prices nationwide rose 10.2per cent in the fourth quarter over the same period a year earlier, according to the National Development and Reform Commission.
In January, the surge continued as prices in 70 large and medium-sized cities jumped 11.3per cent compared with the same month last year, the economic planning body said. Of those markets, Beijing was one of the hottest with a 17.2per cent gain.
Anna Kalifa, Jones Lang LaSalle Beijing's research head, says the capital's property prices will continue to grow, but probably at a slower pace than last year. While many gains of more than 20per cent were recorded in the city's luxury property sector last year, she says an increase of 14 to 17per cent is an accurate estimate for this year.
'With the Olympics coming to Beijing, it is important to realise this in itself is not a driver [of property prices]. The biggest driver is that this is the capital,' she says, adding that the city only has about 40,000 luxury units. About 4,000 new luxury units are expected to come onto the market this year.
Big is the trend in the capital. Beijing Yintai Property has four units in its Park Hyatt Penthouse project in the central business district (CBD). The unfinished units are 550 or 869square metres. The smaller units cost 108,000yuan (HK$120,479) a square metre and the biggest are 128,000yuan a square metre.
Fortune Heights, the tallest apartment building in Beijing at 199 metres, features 180 units of 300 to 800square metres. Next to the new China Central Television headquarters, the units range from 15million yuan to 80million yuan.
Star River is offering the final phase of its eastern Chaoyang district development in Beijing. About 45per cent of the 500 units have sold, while 245- to 660-square-metre flats are available. The average price is 40,000yuan.
In Beijing's western Xidan area, 26 Xi Rongxian has 200 units from 70square metres to 1,000square metres. Prices range from 40,000yuan to 100,000yuan a square metre.
In the Olympic area, Beijing Pangu Plaza features three residential towers across from the Water Cube aquatic venue and near the Bird's Nest stadium and Olympic village. The 192 serviced apartments are 618square metres each. The units start at 39,000yuan a square metre with an average of 55,000yuan.
Also in the Olympic area is Chateau Glory International Club Apartment. The project features six towers with 840 serviced apartments of which 80 are left.
The apartments, with interior input by Hong Kong designer Kenneth Ko Man-on, can be owner-occupied or rented through the in-house service. The units are 150 to 360square metres. The average price is about 28,000yuan a square metre with rentals commanding 15,000yuan to 25,000yuan a month.
In Shenzhen, potential buyers have taken a wait-and-see attitude to the impact the United States subprime mortgage crisis will have on the property market. New home prices in the border city dropped 1.2per cent in January from the previous month, according to the National Development and Reform Commission.
Woody Lam, a mainland-based Hong Konger who oversees Savills southern China, says Shenzhen has yet to hit bottom. The tighter fiscal policies, greater difficulties in getting a mortgage and the implementation of a higher interest rate for buying a second flat are deterring speculators.
In the fourth quarter of last year, luxury flat prices dropped about 7 to 10per cent compared to the third quarter.
'If you compare that with 2006, there was still growth,' says Mr Lam. 'Luxury flats went up 10per cent and average flats about 8per cent. Villas in downtown went up 15per cent.'
Mr Lam says villas are in demand because of limited supply. Most are in the west, beyond the second land border to the special economic zone, close to Shekou, north of Dongguan and along the Guangzhou-Shenzhen highway.
Golf resort Mission Hills in Shenzhen is offering 30 villas in its In Residence project. Situated along the original Jack Nicklaus-designed course, the unfurnished houses are 700, 877 and 1,527square metres in an Italian Renaissance and neo-Classical style with Hawaiian elements.
The properties cost 70million yuan to 171.8million yuan, with a lifetime golf membership fee of an extra 1.68million yuan.
In Shenzhen's Baoan district, Noble Hill is a 526-unit project 15 minutes from the CBD.
Situated at the base of a mountain, it features townhouses, villas and low-rise flats from 126 to 175square metres. Unfurnished units will start selling in April and will be ready early next year. Prices are not yet available.
Not far from Window of the World in Shenzhen is Shining Green Hill. The three high-rise buildings offer units from 130 to 260square metres at an average of 28,000yuan a square metre.
In Shenzhen's central Futian district is Villa Pearl Essence. The project features 11 townhouses from 160 to 200square metres (100,000yuan a square metre) and two low-rise apartment buildings.
The undecorated units of more than 180square metres are selling for 45,000yuan a square metre.
Hutchison Whampoa has three projects in Shenzhen: Shenzhen Dynasty Garden with 785 luxury flats and duplexes in Xixiang, Shenzhen Le Sommet in Longgang district and Regency Park in Baoan district which will be offered in phases.
Mr Lam says this year has been strong for Guangzhou as luxury flats rose 25 to 30per cent, while average apartments are up 10 to 15per cent.
Villas rose about 15per cent. He says local property will benefit by the central government's intention to make it a financial centre in southern China. 'Compared with Shenzhen, Guangzhou is more of an end-user market. The villa supply is limited and the demand is not as great as it is for luxury apartments. For big units of 200 to 300square metres, this market has been on fire for the past couple of years,' he says.
Shui On Properties is offering The Summit, a mixed-use project in Yuexiu district in Guangzhou. The 286 units start on floor 19 of the 46-storey tower and range from 84 to 172square metres. The average selling price is 18,000yuan a square metre.
Other offerings in Guangzhou include Hutchison Whampoa's Cape Coral project in Dashi Town in Guangzhou's Panyu district and The Riverside, featuring eight towers above Huangsha rail station.
Also in Panyu is Star River which is selling the fifth phase of its project along the Pearl River. Central Parkview in Tianhe district will also start selling its second phase.