Riding on improved market sentiment, Hong Kong-listed developer HKR International plans to sell its first Shanghai project and reap sales revenue of more than 1 billion yuan (HK$1.13 billion). HKR, familiar to property owners as the developer of the Discovery Bay project, will sell the 34-storey furnished serviced apartment building at Hua Shan Road on a strata-title basis. The building, known as the Chelsea, is block two of the Kerry Residence phase one development in a high-end residential area in Changning district. HKR bought the tower from Kerry Properties for HK$245 million in 2001. The residential block, comprising 118 serviced apartment units and 125 underground car parking spaces, has been leased by HKR for long-term investment since it was operational in 2002. But the asset is now set to be offered for public sale in the Golden Week holiday starting on May 1. 'The average price is set to be above 50,000 yuan per square metre,' a sales executive at HKR's Shanghai office said. 'The sale is timed to take advantage of the recent recovery in the property market in the city,' she said. With a total gross floor area of 22,066 square metres and 7,415 square feet underground, the sale could reap about one billion yuan assuming that all units are sold. With the development's appealing location, news of the intended sale has already attracted 40 enquiries, which showed the strong initial interest in the project, said the HKR executive. Like other mainland cities, Shanghai has seen a recovery in home sales since the beginning of the year. Last month, a total of 2.05 million sq metres of gross floor area was reportedly sold, representing an increase of 75.5 per cent compared with the same month last year. The March deals were a 74 per cent increase on February transactions, according to property agent Century 21. Average prices, meanwhile, have shown signs of stabilising after recent falls. According to the National Development and Reform Commission, Shanghai home prices rose 0.4 per cent in March over February. However, that remained 2 per cent below March 2008 prices. According to property consultant CB Richard Ellis, 1,266 new luxury apartments were sold in the first quarter, an increase of 23 per cent compared with the same period last year. However, new supply decreased significantly by 62 per cent to 839 units. Capital values of luxury apartments and villas fell 1.7 per cent and 3.2 per cent, respectively. Clement Luk Shing, a director and assistant general manager at Centaline (China), believes HKR can attract enough buyers for the development due to its location and nice views. The property is located close to the city's downtown area and is linked to commercial and shopping areas. 'It is surrounded by a green environment and all units have views of the famous Ding Hsiang Garden. They are not blocked by any buildings. Supply of units that have such impressive views is limited,' Mr Luk said. In the secondary market such units sell at 40,000 to 50,000 yuan per square metre or more but HKR's asking price of 50,000 yuan per square metre for the Chelsea is substantially higher than the price at which it offered the project on an en bloc sale in July last year. The developer was then asking around 32,000 yuan per square metre for the sale of the entire block and had drawn a number of investment funds' initial interest. But no deal was closed. 'The market environment was not that good last year so the asking price was lower,' the HKR executive said. CB Richard Ellis said the reduction in inventory was expected to continue, and it expected no substantial growth in prices since buyers were adopting a wait-and-see attitude. In the leasing market, as multinational companies are most likely to tightly control their budgets and headcounts throughout the year due to the economic downturn, the rents of luxury residential properties are projected to decrease further by 5 to 10 per cent in the next nine months, according to the property consultant.