Penthouse puts Shanghai luxury challenge in focus

A sale at 250,000 yuan per sq m would be a record, and further shrink gap with HK prices

PUBLISHED : Monday, 19 August, 2013, 12:00am
UPDATED : Monday, 19 August, 2013, 3:48am

The price gap between luxury homes in Hong Kong and Shanghai is expected to continue narrowing, fuelled by growing demand from the wealthy at home and abroad.

With Beijing announcing last month its landmark plan to create a free-trade zone in Shanghai, property consultants believes prices in the city are fast catching up with Hong Kong's.

Recently, mainland property agents tipped Overseas Chinese Town (Asia) will offer a penthouse at its super-deluxe project Suhewan, at Suzhou Creek, at an indicative price of 250,000 yuan (HK$314,000) per square metre.

"It will be a record for Shanghai if the penthouse was sold," said Clement Luk, chief executive at Centaline (China) for eastern and northeastern China.

The price for luxury homes in Hong Kong was about three to four times that of Shanghai, compared with 10 times or more a decade ago, he said.

The establishment of the free-trade zone would definitely help to lift luxury home prices as an influx of overseas and domestic businessmen seek opportunities in the city, Luk said.

"The gap in prices between the two cities will narrow as Shanghai will certainly be a top priority when they seek property investments," he said.

Ten years ago, home prices in the area surrounding Zhongshan Park, a prime residential district in Shanghai, were 3,000 yuan per square metre but are now selling for at least 40,000 yuan per square metre, he said.

Overseas Chinese Town reportedly planned to release the first batch of about 100 units at the Suhewan project at an average price of 150,000 yuan per square metre.

Among them, seven are townhouses of between 297 sqm and 380 sqm and two penthouses of 506 sqm and 597 sqm. The two penthouses will cost about 126 million yuan and 150 million yuan respectively.

Agents said it would be the first time since 2010 that units at a new project would be offered at an average price of more than 100,000 yuan per square metre.

"There has been almost no new supply in Huangpu River and Suzhou Creek for nearly nine years," an agent said.

"Such a luxurious project along the river-front is absolutely rare."

But Alan Chiang Sheung-lai, the head of residential property at DTZ Greater China, cast doubt on whether the municipal government would grant pre-sale permit for projects that are asking sky-high prices.

"It may be a gimmick to attract market attention," he said.

But Shanghai's home prices would be unlikely to fall due to the city's residential rents remaining the highest in the nation.

"On the mainland, no other city can offer the high calibre of tenant profiles that Shanghai does," Chiang said.