SHKP penthouse breaks record

Undeterred by government austerity measures, Sun Hung Kai Properties yesterday launched its luxury residential project in Shanghai at a record price.

Victor Lui Ting, executive director of Sun Hung Kai Real Estate Agency, said a 300 square metre penthouse at Shanghai Arch on the Huangpu River in Pudong, would be offered at 264,000 yuan (HK$323,780) per square metre.

A successful sale 'will break the record per square metre for the mainland', said an agent, who asked not to be named.

In November 2009, a 587.41 square metre flat at Tomson Riviera, a nearby luxury estate, sold for 160,844 yuan per square metre or 96.09 million yuan, the most expensive flat on the mainland at the time.

Lui said the first batch of 100 flats, not including the penthouse, would be offered for 93,100 yuan per square metre and 150,000 yuan per square metre next month. They range in size from 150 square metres to 280 sq metres.

He said SHKP would generate two billion yuan if all 100 flats were sold. There are 195 apartments in the development.

The sale came amid calls from the National Development and Reform Commission, the mainland's top planning agency, for the government to expand a pilot property tax based on sale prices to other cities to speed up financial and tax reform. Shanghai and Chongqing introduced the tax a year ago.

Shenzhen and Guangzhou are likely to be among a second batch of cities to implement the tax, which is part of the central authority's move to broaden revenue for local governments, property consultants said.

'As Shenzhen and Guangzhou are first-tier cities where home prices are growing faster than those in the second tier, they may become the next target,' said Alan Chiang Sheung-lai, head of residential property on the mainland for property consultancy DTZ.

'Local authorities are heavily dependent on land sales to fund road and bridge construction. But land sales can't provide a stable income because they fluctuate with the property market,' he said.

Land sales accounted for about 40 per cent of regional government income, he said.

Local authorities are required to contribute 70 per cent of land sales revenue to the central government.

But Chiang said local governments would be allowed to keep the proceeds of the property tax.

'It will help balance regional governments' income source. Then, they can focus on building infrastructure and low-cost housing for the poor,' he said.

The central government has been considering the property tax for nine years.

Property counters fell yesterday with Evergrande Real Estate 2.13 per cent lower at HK$4.12, Shimao Property off 1.49 per cent to HK$7.90, Country Garden dipping 0.66 per cent to HK$3.01 and Agile Properties 0.22 per cent down at HK$8.78.