New | Shanghai faces future home shortage as developers vie for scarce land

Property investment growth in Shanghaislowed in the first half of this year amid intense competition among developers for new land parcels in mainland China’s commercial capital, fuelling worries about a short supply of new homes.

Investment in real estate projects grew 8.7 per cent to 168.5 billion yuan (HK$195 billion) in the first six months of this year, compared to a 15.8 per cent year-on-year rise recorded in the same period of 2015, Tang Huihao, chief economist of Shanghai Statistics Bureau, told reporters at a press conference Monday.

The slower growth adds to evidence that Shanghai is grappling with a severe shortage of new land to build residential properties, likely to result in a new round of home price surges following a series of austerity measures by the city government.

“As Shanghai deepens its restructuring of industrial mix, the local economy’s reliance on the property sector will gradually decrease,” said Tang.

Output of the real estate industry accounted for 6.3 per cent of the city’s gross domestic product in the first half, down 0.5 percentage point from the same period last year.

Between the second half of 2015 and the first quarter of this year, home prices in Shanghai jumped at least 50 per cent as property buyers were battered by fears of dwindling supply of new dwellings in the mainland’s biggest metropolis.

Real estate developers flocked to new land parcels, bidding up the prices sky-high to secure space for development projects in future.