Home prices surge in district of Zhuhai close to Hengqin development

Sales are buoyant in the Jinwan district, close to a proposed luxury holiday development

PUBLISHED : Wednesday, 28 August, 2013, 12:00am
UPDATED : Wednesday, 28 August, 2013, 5:29am

The proposed transformation of Hengqin, the largest of Zhuhai's 146 islands, into a high-end holiday destination has put the "City of Romance" back on the radar for investors.

Home prices in Zhuhai's Jinwan district are rising rapidly because of its proximity to Hengqin, say agents.

"Residential prices in Jinwan have risen by 10 to 15 per cent over the past year while prices in other districts have remained flat," said Zhang Mian, marketing manager at the Zhuhai branch of Hopefluent property agency.

Zhuhai is a prefecture-level city at the mouth of the Pearl River. Hengqin, now the target of a redevelopment scheme, is about three times the size of the adjacent Macau peninsula and Coloane island.

Over the past year, average home prices in the Jinwan district have increased from between 7,000 and 8,000 yuan (HK$8,850 to HK$10,100) per square metre to between 8,000 and 8,400 yuan per square metre, with asking prices in some high-quality new projects reaching 11,000 yuan per square metre, Zhang said.

"Sales of homes in Zhuhai started to become buoyant in March. The increase in sales activity was mainly driven by pent-up demand," she said.

Figures released by the local statistics bureau show that 1.59 million square metres of residential property changed hands in Zhuhai in the first six months of the year for a total 19.82 billion yuan - the best first-half performance in terms of sales volume and value since 2000 when Beijing rolled out a string of cooling measures to curb price rises.

The Zhuhai city government put a cap of 11,285 yuan per square metre on residential prices in 2011, required developers to submit their selling prices for approval and warned they would not be given sales permits if prices exceeded this level.

But an 87,502 square-metre commercial-residential site in Hengqin sold for 3.84 billion yuan last month, representing an accommodation cost of 15,874 yuan per square metre. "It was the most expensive development site ever sold in Zhuhai," Zhang said.

Alan Chiang Sheung-lai, head of residential property for greater China at DTZ, expects apartments at the site will have to be priced at about 30,000 yuan per square metre in order to generate a reasonable profit for the developer.

"They will be luxury apartments, as Hengqin aims to attract world-class hotels and tourism-related operators," he said.

Zhang said it was common for developers to get around the cap on sale prices by adding extra decoration costs to the listed prices of their luxury projects. "This way, prices for some luxury residential projects will effectively work out at 15,000 to 16,000 yuan per square metre," she said.

Chiang believes the transformation of Hengqin and the opening of the Hong Kong-Zhuhai-Macau bridge in 2016 will boost Zhuhai's economic growth.

Hengqin, Qianhai in Shenzhen, and Nansha in Guangzhou, were identified in the nation's 12th five-year plan through to 2015 as special economic zones in Guangdong.

They will be test beds for new free-trade-zone concepts, using tax and other incentives to attract investors.

A total of 56 ongoing projects in Hengqin - to which a total investment of 226 billion yuan has been committed - are under way, according to Niu Jing, director of the administrative committee of the Hengqin New Area.

Shun Tak Holdings last month paid 721 million yuan for a 23,834 square-metre site designated for offices, a hotel and serviced apartments in Hengqin.