As an emerging market, rapidly rising residential prices have attracted speculators and investors looking to capitalise on property values.
July 30, 2012 - Shanghai
Shanghai, despite what many people say, retains some appreciation for its history. This is best shown by the value placed on homes in the French Concession area.
"As an emerging market, rapidly rising residential prices have attracted speculators and investors looking to capitalise on property values."
145 - The percentage amount high-end property prices in Shanghai rose in the past five years
7,800 - The number of super rich living in Shanghai with personal wealth of over RMB100 million
The Shanghainese love of houses is also matched by the pursuit of the ultimate status symbol, a super-luxury high-rise development which can be found in either Xintiandi or Lujiazui Riverside, in keeping with the city's role as the commercial centre for one of the fastest growing economies in the world. While these may be the premium enclaves at the moment, the luxury residential market's relative youth and dynamism mean that new areas could easily develop to compete with the current incumbents.
The French Concession, a throw back to European colonialism, is extremely popular, especially with local buyers and Europeans. Old garden villas and lane houses are camouflaged by tree-lined streets, dominated by platanes brought by the French in 1902. Only 4,000 garden villas remain in the Concession with new residential developments, numbering approximately 2,000 homes, confined to the periphery by a protection decree instituted in 2002.
Xintiandi, or Taipingqiao Lake, is renowned as a superbly master planned comprehensive development which incorporates high-end dining and entertainment venues, with luxury residential stock, office towers and five-star hotels. Built by the Hong Kong developer Shui On Land, the 570,000-sq m, centrally located scheme is now one of the most highly sought-after residential enclaves in Shanghai, attracting numerous Hong Kong and Taiwanese end users and investors. Xintiandi comprises more than 2,000 homes, most of which are highrise apartments, but subsequent phases are expected to more than double this number over the next decade.
Lujiazui Riverside, hugging the east bank of the Huangpu River, is just a stone's throw away from the centre of China's finance industry. High-rise developments provide breathtaking views across the Huangpu River over to the historic Bund, which once housed numerous European banks and trading houses. Recording some of the highest residential prices in the whole of China, Lujiazui Riverside tends to attract well-heeled Chinese buyers looking to raise their profile by buying the latest status symbol. There are now estimated to be over 6,900 high-rise apartments in the development.
The nation's stellar economic growth and the creation of a new generation of wealthy Chinese is perhaps the most vital driving force of the luxury residential market. Shanghai, like Beijing, attracts people from all over China lured by the bright lights and thriving business environment.
As an emerging market, rapidly rising residential prices have attracted speculators and investors looking to capitalise on property values. In order to curb this influx of money and keep residential prices at relatively affordable levels, the central government has introduced a number of taxes on the transaction of properties, which tend to be higher the faster the properties are resold. Shanghai, along with Chongqing, was also the first city to introduce a property tax, which is now charged on an annual basis on the value of the property. Currently, the tax rate is only 0.42% and only charged on newly acquired investment properties.
As Shanghai continues to develop, land availability has become a concern for developers and government planners alike. Scarcity of land has pushed up values dramatically and this will be passed on to home buyers in the form of elevated residential prices once developments come to market.
Despite the short-term adversities which afflict the residential market, given the limited investment channels in China as well as rising incomes and wealth, the Shanghai luxury residential market looks set to have a rosy long-term future.
#7, 506 Huangpi Road (S), Xintiandi, Shanghai
Gross Floor Area: 687 sq m
Transaction Price: RMB101 million (RMB147,000 per sq m)
Transacted Date: July 2011
#17, 385 Liuyin Road, Zhangjiang, Pudong New District, Shanghai
Gross Floor Area: 850 sq m
Transaction Price: RMB135 million (RMB158,800 per sq m)
Transacted Date: August 2011
#22, 599 Fangdian Road, Huamu, Pudong New District, Shanghai
Gross Floor Area: 411 sq m
Transaction Price: RMB67 million (RMB61,900 per sq m)
Transacted Date: June 2011
Source from: Savills
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