A 665-unit project in Shenzhen could be home to flats worth 20 million yuan (US$2.8 million), if its developers win approval for an average price of 100,000 yuan per square metre, industry insiders said. Longhua Jinmao Palace, which was completed eight months ago and has been left unsold since then, could – at a 50 per cent premium over its neighbourhood – become the Shenzhen Longhua district’s most expensive residential development. Last week, China Jinmao Holdings Group and state-owned Power Construction Corporation of China organised a curtain-raiser for the project, Longhua Jinmao Palace, with the hope of leveraging an announcement by Beijing 10 days earlier that it would reform Shenzhen as a model city for the country and the world. “No doubt that the recent policy favouring Shenzhen has stimulated the housing market, as we have seen demand increase sharply. Developers now would like to derive the benefits of this exciting news and get a better deal,” said Yan Yuejin, research director at Shanghai-based property services company E-House China Research and Development Institution. “In theory, home prices have to increase when we see talent flocking to a city. However, how fast they go up still depends largely on government controls over the sector,” he added. Shenzhen sells five plots at record prices in biggest land tender since 2001 A joint venture between China Jinmao Holdings and Power Construction Corporation of China forked out 8.3 billion yuan, or 56,800 yuan per square metre, for the site in Longhua in 2016, beating 17 rivals. Pricing at the project could point to were Shenzhen’s home prices in general are headed. It has been delayed because the developers believed their estimated break-even price would not be green lit by the local government. They now believe Beijing’s model city announcement changes that. “[A break-even price of 100,000 yuan] will be about 50 per cent higher than the price of lived-in homes nearby, which is not in line with the central government’s message of curbing home prices,” said Fion He, chief analyst with property agent Midland Holdings. “Otherwise, the developers will lose money.” Shenzhen home sales rose 66 per cent, hit 30-month high, according to April data The Shenzhen government, like that of all major mainland Chinese cities, has been trying to cool prices since 2017 through a number of measures, including the withholding of permits to developers if they price new flats too high. The sales of new homes have risen in Shenzhen since Beijing’s announcement, jumping 10 per cent for two weekends in a row. Property agents said some units in Longhua Jinmao Palace could be priced as high as 130,000 yuan per square metre. This would translate into the smallest flat – measuring 155 square metres – costing about 16 million yuan. Shenzhen among world’s five most expensive cities for residential property Currently, only nine projects have been priced at more than 100,000 yuan per square metre in Shenzhen. Eight of these are located in the Nanshan district, the innovation hub home to Chinese technology giants such as Tencent Holdings, ZTE Corporation and SZ DJI Technology. One is in Futian, the city’s central business district. Longhua, on the other hand, lies about a 40 minutes’ drive from Futian and a 30 minutes’ drive from Nanshan.