Developers are becoming more aggressive in attracting foreign buyers and investors to residential developments in Shanghai following the implementation of new housing rules. At the weekend, four Shanghai projects were released to Hong Kong buyers through exhibitions at SAR hotels. The unification of the domestic and foreign housing markets from August 1 is expected to create a flurry of deals as developers seek foreign interest. The merger of the markets allows foreigners to buy residential property on the same basis as mainlanders, meaning more variety at lower prices. Offerings in Hong Kong last weekend included Sun Hung Kai Properties' Arcadia Shanghai in Xuhui district, CapitaLand China Holdings' Manhattan Heights in Jingan district and YUD (Group)'s Kingspark in Weihai Road. Philip Wu, associate sales director of Midland Realty (China), the marketing agent for Manhattan Heights, said about 40 of the 72 units offered to Hong Kong buyers were sold. The units were priced at an average HK$930 per square foot. He said the SAR sales capitalised on the improved sentiment after the new housing rules. Buyers in Manhattan Heights included Hong Kong residents as well as people from other areas such as Taiwan, Japan, Denmark and Southeast Asia. Mr Wu said the two-block development, comprising 256 units, had been nearly 80 per cent sold since internal sales began in June. DTZ Debenham Tie Leung general manager in Shanghai Edward Cheung said Shanghai's residential property market now was open to international interest. An example was a project by an Australian bank, which managed to bring in buyers from Australia. There also were buyers from Hong Kong, Singapore and Taiwan. Mr Cheung said good-quality housing in Shanghai was selling at HK$1,200 per sq ft to HK$1,300 per sq ft, still far below the average of about HK$5,000 per sq ft for similar flats in Happy Valley, Hong Kong. The lower pricing was certain to attract foreign investors. He expected to see more Shanghai projects offered in Hong Kong, with DTZ planning an exhibition sale in the SAR in December in partnership with the Xuhui district government to promote housing projects in the Shanghai residential area. Sam Crispin, research director at FPDSavills Shanghai, said that while the recent merger of the housing markets was a factor, the threat of rising prices was encouraging buyers to act now 'before it is too late'. He said supply of quality housing in good locations was increasing and financing was more readily available. New infrastructure also was opening up locations where cheaper property was available. 'A secondary market is emerging which offers a good supply of cheaper property than now, and decoration is already complete, which saves cost and hassle for buyers,' he said. Mr Crispin said owners who bought in the previous sales boom five years ago now were looking to sell, often at highly attractive prices. 'Buy-to-lease purchasers should take care to invest only in properties of a type with a proven record of interest from tenants and in locations that are attractive to tenants,' he said. Under Shanghai's new housing rules, foreign and mainland buyers or tenants will enjoy equal treatment. Foreign buyers and tenants can buy or lease any residential property. Transaction fees and taxes were unified, cutting costs to foreign buyers. Also unified in the new rules was the land-use system. The Shanghai government will launch a public-auction system that will allow overseas and domestic companies to compete for land on the same financial terms. According to FPDSavills, a foreign buyer who purchased a unit for 500,000 yuan (about HK$468,500) and was eligible for a 70 per cent mortgage would pay just 2,424 yuan per month. The property consultant said Shanghai's domestic property indices surged 6 per cent year on year in June. Domestic housing indices have recovered to mid-1998 levels, driven by strong demand. FPDSavills said developers, sensing a booming market, would bid more aggressively for land, pushing home prices even higher.