Luxury markets are beginning to feel ripples from the global financial meltdown, but agents and developers remain bullish about longer-term prospects
With the number of high-net-worth individuals increasing over the years, China's luxury property markets remain steady, with developers turning out in force to build ever more expensive residences for cash-flush buyers and investors.
Nevertheless, price falls were reported by agents and the Beijing municipal government last month. These were largely attributed to the suspension of marketing campaigns during the Olympics in August, but now Centaline also reports that prices in the capital have dropped 15 per cent since last October, when the central government implemented measures to cool the property market.
Significant wealth accumulation on the mainland over the past decade was the key driver behind the momentum in luxury home prices. 'The mainland's luxury residential market has a relatively short history. Before 2003, it was almost unheard of,' says Alan Chiang Sheung-lai, head of residential at DTZ. 'As there is no standard definition of luxury homes in China, anything large was once branded as luxury property. However, location, size and price are now all key considerations.'
By DTZ's reckoning, luxury homes in China account for just under 10 per cent of the mainland's overall residential stock. Mr Chiang says general market sentiment has softened, resulting in declines in property transactions and prices, but selected newly released luxury projects in Beijing, Shanghai and Hangzhou continue to be the talk of the town.
'Prices of certain new projects in Beijing and Shanghai have even increased in the past two or three months, although corrections are likely in coming months given the global financial troubles,' he says.
