Shanghai flats on sale with big discounts

Socam Development is offering to sell its luxury rental property project in Shanghai's upmarket Xintiandi area 20 per cent below the going rate.

Ahead of its full-year results in March, the company yesterday launched in Hong Kong 10 units of the serviced apartment project Residence 18 at an average of 120,000 yuan (HK$153,700) per square metre in terms of gross floor area.

On offer is guaranteed annual rental income of 5 per cent per year in the first two years, plus a free car park slot worth 600,000 yuan.

"We have priced the launch units competitively as they have garden view instead of lake view, which will fetch higher prices," said Allen Taylor, the general manager for residential sales and marketing at Shui On Development, a unit of Shui On Group.

Last month, Taylor said the company had raised 400 million yuan from the sale of 30 units of Residence 18 when it was launched in Shanghai.

The 10 units launched in Hong Kong are 987 to 2,083 sq ft, with prices ranging between 10 million yuan and 24 million yuan.

David Hui, a sales director at Centaline's China and overseas project division, said asking prices for luxury units in the secondary market in the same area were about 150,000 yuan per square metre.

Taylor said the firm would pull in 1.7 billion yuan if the project sold all the 102 units. That would translate into a profit of more than 700 million yuan.

In 2010, Socam paid 929 million yuan, or 58,824 yuan per square metre, for the luxury block from Mirae Asset Financial Group, the largest equity fund manager in South Korea.

Hui said most luxury flats on sale in the secondary market were dominated by large units of 200 to 300 square metres that required a minimum investment of 30 million yuan.

"Due to the lack of supply and high land costs, home prices in prime locations in Shanghai will continue to rise this year but at a slower pace," he said.

In November, a commercial site in Huangpu district changed hands for 1.1 billion yuan, or 42,821 yuan per square metre, the most expensive site in terms of unit price in Shanghai.

Taylor said the 10 units would go on sale on Saturday and Sunday and come with lease agreements with monthly rents of 20,000 yuan to 60,000 yuan.

Leases for the first batch of units would expire either this year or next.