Developer upbeat about super-luxury initiative in suburban area despite oversupply in sector and falling prices
Mainland property giant Shimao Group has launched a 4 billion yuan, super-luxury villa project in suburban Shanghai, even though property prices and sales are falling in the city.
One of China's biggest property developers, Shimao is offering European-style villas, including a mock French chateau, at prices ranging from 28.55 million to 250 million yuan.
Last Saturday, Shimao started its marketing blitz at the Mandarin Oriental Hotel in Hong Kong, offering 55 of the 72 units on an area of 53 hectares, on islands it has built on a man-made lake. The units are designed in French, Italian, British and Mediterranean styles, with swimming pools, fitness rooms, mini-cinemas and computer control of lights and curtains. Shimao is betting that its reputation and marketing skills will overcome the weak sentiment in the market.
In July, the city's housing index fell 41 points, or 2.82 per cent, from June, the biggest monthly drop since December 1999, according to the official Chinese Real Estate Index System. The amount of space transacted in the city's commercial and residential sector in July fell to 778,000 square metres, a third of that in June. Investors are staying away because of tighter bank lending and a new capital gains tax.
The villa market is the most vulnerable to the downturn and the most speculative because the number of end users, foreign and Chinese, is limited.