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Jade Sinks, $7,800 Taps Lure China’s Wealthy Defying Curbs

A view of Shanghai is seen from the master bathroom in the penthouse apartment on the 42nd floor of the Tomson Riviera in Shanghai. Photographer: Kevin Lee/Bloomberg
A view of Shanghai is seen from the master bathroom in the penthouse apartment on the 42nd floor of the Tomson Riviera in Shanghai. Photographer: Kevin Lee/Bloomberg

Aug. 25 (Bloomberg) -- In the Lakeville apartment complex overlooking Shanghai’s downtown bar and shopping district, the yellow jade bathroom sink alone would cost the average Chinese worker three years’ pay.

The entire four-bedroom, ground-floor apartment with a terrace, which sold in May for 60 million yuan ($9.4 million), would take 3,140 years of toil. Such luxurious properties are in demand for the swelling ranks of millionaires chasing status and a hedge against soaring inflation even as the government steps up curbs on real estate investment.

High-end home prices rose 17.4 percent in Beijing last quarter from a year earlier, according to Savills Plc, which assigns the category to properties costing 50,000 yuan or more per square meter (10.8 square foot). Luxury prices in the financial center of Shanghai jumped 5 percent.

“Luxury homes are still investment darlings of rich people,” said Albert Lau, Shanghai-based head of Savills China. “They will still buy properties rather than sit there to see their money losing value every day.”

China’s consumer price index rose to 6.5 percent in July, the fastest pace in three years and almost double the one-year deposit rate of 3.5 percent. With the benchmark stock index losing 9 percent this year and limits on overseas investment, China’s rich are still turning to property, defying a government determined to cool the market.

Luxury home prices also have been rising in other parts of the world. In central London, values of houses and apartments costing an average of 3.7 million pounds ($6.1 million) rose 9.6 percent in the 12 months through July, the most in six months, according to an index compiled by London-based real-estate broker Knight Frank LLP.

Government Crackdown

Chinese authorities this year vowed to crack down on “speculative capital” with measures including the introduction of a property tax in Shanghai and Chongqing, higher down-payment requirements and limiting the number of home purchases by each family in metropolitan areas such as Shanghai and Beijing.

High-end property accounts for approximately 7 percent of China’s overall residential market, according to Jones Lang LaSalle Inc., which defines the category as above 40,000 yuan per square meter. Just 1 percent of the residential market in Beijing and Shanghai is priced above 64,000 yuan per square meter, according to London-based Savills.

“Those rich people, if they want to buy, they always find ways,” said Jenny Zhan, a senior associate director for residential properties for eastern China at broker DTZ Holdings Plc.

Tomson Riviera

The 34-member Shanghai Stock Exchange Property Index climbed 3.7 percent in Shanghai, the most in seven months.

China, with 1.3 billion people, has 960,000 individuals with personal wealth of at least 10 million yuan each, a 9.7 percent increase from last year, Hurun Research Institute, a Shanghai-based group that tracks the nation’s rich, said in an April report.

Per-capita urban-household disposable income rose to 19,109 yuan last year, according to the nation’s statistics bureau.

The most expensive unit in the Lakeville building, developed by Hong Kong billionaire Vincent Lo’s Shui On Land Ltd., may be the second priciest in per-square-meter terms in Shanghai, behind Tomson Group’s Tomson Riviera, where apartments cost at least 160,000 yuan per square meter, according to Chicago-based Jones Lang, the world’s second-largest commercial brokerage. Nestled between office towers in the Pudong area, Tomson’s four towers overlook the Huangpu River that snakes through the city.

Italian Taps

The jade sink isn’t the only luxury feature of the 360 square meters (3,874 square feet) Lakeville apartment: It boasts a 30,000 yuan toilet with buttons to adjust the water temperature, 50,000 yuan designer Italian taps, and a mosaic wall of red, blue and black tiles that cost 200,000 yuan.

It is one of the 18 units in four low-rise buildings at Lakeville, developed around the city’s bar and shopping district Xintiandi, which means New Heaven and Earth in Chinese. About 70 percent of the apartments, including a 110 million yuan penthouse, have already sold after they went on sale at the end of last year, said Shirley Tang, associate director of residential sales with Savills, which is marketing the units.

About half of the buyers made the one-off payment in cash, according to Tang. About half were Chinese, while the others were foreigners or Chinese holding foreign passports, she said.

Shui On Land’s Chief Executive Officer Freddy Lee said he is “satisfied” with sales at the company’s residential projects, and doesn’t plan price cuts. “Demand is still there.”

Longfor Properties

Longfor Properties Co., the developer controlled by China’s richest woman Wu Yajun, unveiled 1,002 villas worth a combined 2 billion yuan in the eastern city of Yantai in July. They were sold out within a week, the company said in an e-mailed statement on Aug. 8. The company, which specializes in high-end properties, said contracted sales rose 31.4 percent in July from a year earlier to 2.6 billion yuan.

“People are betting that prices are still going to rise,” said Larry Hu, a Shanghai-based director of the residential department for Knight Frank. “China’s property measures - we have heard a lot of thunder, but we have yet to see the rain. Policy enforcement in many small cities isn’t that strict.”

Heritage Estate

China’s most expensive apartments per square meter were being marketed at Beijing’s Heritage Estate, or Diaoyutai Courtyard No. 7 in Chinese. The luxury units next to the Diaoyutai State Guest house, built in the 1950s by Chairman Mao Zedong to host foreign country leaders, were priced at more than 300,000 yuan per square meter. The city’s government halted sales at the apartment complex in June and began an investigation into the developer for possible “profiteering.”

Mass-market home prices in Beijing rose 0.1 percent last month from June to 22,896 yuan per square meter, while those in Shanghai climbed by 0.4 percent to 23,856 yuan per square meter, according to SouFun Holdings Ltd., the country’s biggest real estate website.

Home prices in Beijing and Shanghai stopped rising for the first time this year, signaling measures to cool the property market are beginning to work. New home prices in the nation’s capital and financial center were unchanged last month from June, while they fell in 14 of 70 cities monitored by the government, the statistics bureau said on its website Aug. 18.

Pockets of Caution

Pockets of caution are emerging at some high-end projects. Very few units were sold last month at Shanghai’s Meihua Garden, a residential complex developed around Madame Chiang Kai-shek’s former residence, according to DTZ. Three-bedroom, 250-square-meter homes there cost 14 million yuan to 19 million yuan.

“Most buyers are waiting to see the direction of government policies,” said DTZ’s Zhan.

That’s unlikely to lead to lower prices, said Liu Yuan, a researcher at Centaline Property Agency Ltd., China’s biggest property brokerage.

“People still have a lot of money; the only problem is eligibility for purchase,” Liu said, referring to limits on the number of homes being bought.

China’s luxury home price gains are trailing those in Hong Kong and London, according to Knight Frank. Hong Kong prices rose 9.4 percent and London 7 percent in the six months to June, compared with a 2.4 percent advance in Shanghai and 6.6 percent in Beijing.

A one-bedroom duplex at One Hyde Park, the luxury-condominium complex in London’s affluent Knightsbridge neighborhood, sold for 9.85 million pounds in the second quarter, according to the Land Registry.

“In those super prime locations, China’s luxury home prices are relatively inexpensive on a per-square-foot basis compared to those in Hong Kong, London and New York,” said Michael Klibaner, head of China research at Jones Lang. “It’s still quite reasonable.”

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at

To contact the editor responsible for this story: Andreea Papuc at

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