Shanghai, China’s financial center, has approved a developer to seek the highest ever home prices in the city, in an effort to boost its sluggish luxury home market.
Shenzhen Overseas Chinese Town Co. can set prices for its high-end residential properties as high as 298,000 yuan ($48,100) per square meter (10.76 square feet), according to the website of the city’s real estate trading center. That’s the highest asking price ever in the metropolis, according to SouFun Holdings Ltd., China’s biggest real estate website, and realtor Centaline Group.
“This is a kind of policy-easing as the government is trying to boost buyers’ confidence,” said Liu Yuan, a Shanghai-based researcher at Centaline. “If developers are allowed to sell at a higher price, then people will think the market is not as bad as they may have thought.”
Some Chinese cities have already started to ease property policies amid a slowdown of the nation’s property industry, prompted by the government’s four-year effort to rein in prices and stamp out speculation. Home sales from January to May slumped 10 percent from a year earlier, a stark contrast to the 27 percent surge in 2013, even as developers tried to boost sales by reducing prices and offering incentives.
Pre-sale approvals are part of the government’s property policies to regulate the market by placing caps on the city’s home prices. China’s first-tier cities such as Beijing, Shenzhen and Guangzhou, where home-price gains were among the biggest last year, have once rejected pre-sale permits for projects that had target selling prices are deemed too high by local officials.
China’s northern city of Hohhot became the first city to ease home-purchase restrictions last month. Residents of the provincial capital of Inner Mongolia, previously limited to how many properties they could buy, no longer need to show ownership proof of home purchases. Non-residents will also be allowed to buy homes in the city, according to a statement on the local housing authority’s website.
The maximum price that Shenzhen Overseas is allowed to set has surpassed the record that Sun Hung Kai Properties Ltd. held in the city, which was 264,000 yuan per square meter, according to Centaline. A property project in Beijing was priced at 300,000 yuan per square meter in 2011. Chinese developers are required to obtain approval from the government and register their sale price at the local housing authority.
Shanghai sold a 6,885-square-meter plot in the city’s downtown area for 577 million yuan to a unit of Lai Fung Holdings Ltd. yesterday, implying a cost of 85,513 yuan per square meter of buildable space, the most expensive in China, China Securities Journal reported today, without citing anyone.
— With assistance by Bonnie Cao