Flats discounted as developers try to spark revival

Developers have banked on price cuts to stimulate residential sales in Shanghai in view of the weak market.

FPDSavills said prices had been cut by up to 50 per cent in many projects that had experienced sluggish sales over the past few years.

'It's simply a matter of trimming prices in line with what purchasers are willing to pay,' said China Research head Sam Crispin.

He added it was a further demonstration that in the mainland the real estate markets were at least working.

Following the discounted prices offered for Zhenan Square, Everwin Garden and Roman Garden early this year, two other major developers - Gateway Plaza and Zongshan Square - offered discounted prices.

FPDSavills said Ryoden Development had released nearly 300 units of Gateway Plaza at discounted prices of 4,800 (about HK$4,468) to 8,000 yuan per square metre.

The initial price was US$1,800 per sq m in 1997.

Zhongshan Square and Zhongshan West Road were offered at prices of 5,300 yuan to 6,500 yuan per sq m.

In the third quarter, an additional 382 apartments came on stream, taking total stock to about 39,300 apartments and villas in Shanghai.

According to FPDSavills, average rents for Puxi apartments and villas fell slightly to $24 per sq m and $26 per sq m a month respectively.

Compared with the Puxi villa market, the villa market in Pudong showed more signs of stability due to an increasing number of foreign-invested factories setting up in the area, bringing more expatriates in, it said.

According to a recent survey by the Shanghai branch of the Industrial and Commercial Bank of China, more than 80 per cent of people polled planned to buy a home in the next two years.

About 51 per cent hoped to purchase apartments measuring 80-100 sq m and 54 per cent said they could afford 3,000-5,000 yuan per sq m.

More than 40 per cent planned to use bank mortgages to finance their purchase.

Quality Beijing residential spaces were filling quickly. About 35 units in East Gate Plaza were leased in the third quarter for $20 per sq m per month on average, taking occupancy in the north tower to more than 70 per cent.

The consultant said leasing in the Beijing Kerry Centre had also been strong with 70 per cent of the 195 apartments now occupied.

Beijing Riviera and River Garden remained popular and both projects were more than 85 per cent occupied.

Rents in prime apartments continued to fall and now averaged $22 per sq m per month, a drop of 25 per cent compared to the fourth quarter of last year, it said.

Villa rents were falling more slowly and averaged US$22.60 per sq m at the end of the third quarter, 16 per cent lower than at the end of last year.

In the third quarter, 297 units of new prime apartments came on to the market.

Total prime residential stock was 9,861 units - 6,580 apartments and 3,281 villas.

Completion of Jianguo Apartments and Tower C of Pacific Century Place had been postponed to the fourth quarter.

FPDSavills said this year's total supply of new prime units would be lower than expected as projects were behind schedule and work on some projects such as Sun House Apartments had stopped indefinitely.