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Sandy Li

The real estate markets of China's southern cities appear to be stirring into life after years of hibernation.

 Two residential developments launched in Guangzhou and Shenzhen have both reported strong responses in recent weeks.

 Analysts said the sector had benefited from increased buying from affluent young mainlanders and surging demand from Hong Kong home-seekers whose purchasing power has lagged behind Hong Kong's fast-rising property prices.

 Last month, a long queue of prospective buyers formed outside the sales office of Guangzhou residential project, Glorious City Garden, a week before its official sale.

 Prices of units range from $800,000 to about $2 million, or $836 per square foot to $929 per sq ft.

 Developers China Overseas Land & Investment, Yue Xiu Enterprises Holdings and Sun Hung Kai Properties said all 500 units in the first phase of the development had been sold.

 Another residential development attracting a large number of potential buyers is East Pacific Garden in Futian, Shenzhen.

 According to marketing agent C Y Leung & Co, the developer sold 40 per cent of flats to domestic buyers and the rest to Hong Kong buyers. Each unit is worth about $1.3 million.

 Serena Lau Sze-wan, managing director of RHL International Property Consultants, said she was surprised by the purchasing power of the mainlanders, who paid cash for their flats.

 The monthly income of professionals working for foreign-owned enterprises ranges from 1,000 yuan to 2,000 yuan (about HK$928.60 to HK$1,857.20) a month but employees at state-owned enterprises still got about 700 yuan to 800 yuan, she said.

 Ms Lau believed the implementation of mortgage lending from Chinese banks later this year would stimulate buying demand.

 She said it was expected that banks in China would adopt a policy providing a 50 per cent mortgage ceiling for mainlanders.

 The repayment period would be 10 years, much shorter than Hong Kong's 20 to 25 years, she said.

 Ms Lau said property prices in Shenzhen had risen 10 per cent since the beginning of the year and that the momentum for growth was expected to remain strong.

 The trend, according to real estate agents, is not that surprising since mainlanders have accumulated wealth from the stock market and privately owned business.

 They said this group comprised young entrepreneurs and professionals working at foreign-owned companies who were not eligible for government-subsidised housing.

 Buying a private home was their first priority when they had surplus money, analysts said.

 The recent volatility of the stock markets in Shenzhen and Shanghai might have a short-term impact on buying sentiment, analysts said.

 However, agents believed the effects would not last long as most mainlanders were end-users.

 China's real estate market has rebounded after bottoming out late last year following a three-year property slump, agents said.

 The recovery is renewing interest from buyers in Hong Kong for quality residential developments over the border.

 Ms Lau said Hong Kong buyers were divided into two groups.

 The first consisted of professionals in Hong Kong or those with surplus cash who were interested in upmarket residential developments in Shanghai and Beijing for long-term investment, she said.

 The second group, the territory's 'grass roots' buyers, for whom it had become almost impossible to afford a home in Hong Kong, also tended to buy across the border, she said.

 'They have more choices in Shenzhen buying a home worth $1 million,' she said.

 Some even planned to migrate to Shenzhen and to earn their living there by operating small trading firms, she said.

 As the travelling time between Hong Kong and Shenzhen continued to be reduced, she believed more and more Hong Kong people would leave the territory to live in Shenzhen.

 Residential projects selling for $650 per sq ft to $836 per sq ft in good locations in Shenzhen would receive an encouraging response, said Ms Lau.

 C Y Leung & Co director Edward Cheng Kwok-ching said buyers from Hong Kong, who had been sceptical about whether promised mainland developments would be finished, had begun to change their views about China earlier this year after seeing that most of the mainland residential developments offered for sale in the territory had been completed.

  'Property prices in Tin Shui Wai, a stone's throw from the Hong Kong-Shenzhen border, are $5,000 per sq ft,' he said.

 Prices in Shenzhen were only about one-tenth the cost of Tin Shui Wai, Mr Cheng said, giving buyers from Hong Kong much more of a choice.

 He expected the number of people working across the border to continue to increase in the years ahead, thus creating a demand for residential properties.

  Analysts stressed that the property market in China had not fully recovered from its sluggishness and that only sales in Shenzhen and Guangzhou had started to pick up.

 The amount of supply generated over the past few years had yet to be digested, they said.

 According to figures released by RHL International Property Consultants in January of this year, about 48 million sq ft of property in Shenzhen was unsold, and only a small portion of sold properties were occupied.



Southern China properties appeal to mainlanders and Hong Kong buyers