Treasure hunting has begun in Shanghai's Nanhui district, south of Pudong, as investors lay bets that last month's announcement of the integration of the two districts will spark new property developments. To help drive Shanghai's effort to develop into a major international financial and shipping hub by 2020, the State Council on May 6 said the district authorities of Pudong could enlarge the size of the area under its control by adding Nanhui to its turf. The concept of creating a 'Mega Pudong' immediately raised the prospect of accelerated development in Nanhui which has major developments in Yangshan International Deepwater Harbour and Pudong International Airport. On the cards, investors expect, would be the extension into the area of tax breaks and streamlined investment procedures, now enjoyed in Pudong. 'Sales in Nanhui are gaining momentum as buyers believe the new plan will bring an influx of capital to upgrade the area's infrastructure and in turn boost property prices,' said Yang Hongxu, a researcher at property consultant and information provider E-House China Holdings. Boosted by the positive news prices and transaction volumes in the core location of Nanhui - where home values were 20 per cent to 30 per cent cheaper than Pudong - had increased by between 10 and 15 per cent in less than a month, Mr Yang said. Besides end-users accelerating their purchase decisions, he said, investors had also turned to the area in search of bargains. 'Investors from other provinces such as Wenzhou have started to look for residential properties to bet on price appreciation in the area,' he said. But Mr Yang said after rapid gains in less than one month it was likely that the market would pause for a breather, and he advised caution. The integration will more than double Pudong's land area to 1,210 square kilometres from its present 533 sq km and boost its combined economic output and population. The gross domestic product of the Pudong New Area amounted to 315 billion yuan (HK$358.21 billion) last year, while Nanhui's GDP was 54.8 billion yuan. 'Nanhui is equivalent to Hong Kong's Sheung Shui where prices still lag behind other areas. Any positive news will give a boost to property sales,' said Peter Li, a deputy general manager at Centaline China's Pudong branch. Since the announcement of the merger, the number of secondary transactions handled by the firm in the area had shot up 15 per cent, said Mr Li, and average transaction prices were up by the same margin to between 8,000 and 11,500 yuan per square metre. Apartments closer to the Pudong New District were being offered at above 10,000 yuan per square metre, while further out, some cheaper units were being offered at 6,000 yuan per square metre. 'While most clients were end-users, some enquiries were made by investors,' Mr Li said. Sales in the secondary market are now focused on standard units priced at between 800,000 and 900,000 yuan, while transaction prices for villas range from 3.5 million to 10 million yuan, depending on location. Mr Li said in the Nanhui district the residential markets of Zhupu, Kangqiao and Linggang New City would likely show the most active trading later this year since they stood to benefit most from the merger plan. In Zhupu and Kangqiao, new projects were on sale for between 9,800 and 10,800 yuan per square metre, while villas were pitched at about 12,500 yuan per square metre, according to property website Soufun.