Shanghai house selling crisis
Recently a sign of price decline appeared in Shanghai house market, even some luxury apartments in the city centre. Under such a situation, potential buyers decided to wait and see before making the purchasing decision.
Many potential buyers in Shanghai are expecting a further decline after the drop in Shenzhen housing prices, declining by nearly 30 percent in the first half. It is showed by the statistics from China Real Estate Index Academy that in Shanghai house market there is a sales drop of 27.6 percent from last year to 8.85 million sq m while a rise of 7.26 percent in housing price.
Hu Yinghua, a researcher at China Real Estate Index Academy, said that Shanghai’s real estate market was going through a mild revision period with the government attempting to maintain the property price stable with no fierce fluctuation.
Chen Wei, senior directors of residential project marketing services at CB Richard Ellis told China daily that there was expected a correction by around 10 percent in the second half, beginning with a price drop.
“It is also up to the real estate by choosing the timing of price declining.” said Chen.
Meanwhile, many real estate developers are committed to not to lower the housing price, despite the declining sales, which will consume their profits and may lead to corporate capital liquidity problems.
According to what a source in a Shanghai-based real estate developers told China Daily, many property developers are trying to maintain the price at the current level through the third quarter with their firm belief that there will be a sales recovery after this period.”If the situation still terrible after the third quarter, the housing price will probably decline,” the source said.
Market insiders expected the price to fall for the fact of the large supply in the second half.”The increasing supply of apartments in suburban Shanghai in the second half may cause a general housing price decline,” said Chen at CB Richard Ellis.
For example, Shanghai Greenland Baoshan Real Estate started a new housing estate near the outer ring, Lvdi Linghai in Baoshan District on June 27, with the opening price of 7,600 yuan per sq m, nearly 20 percent lower than the average price of the buildings in its neighbor.
“But the prices of the downtown buildings may ramain stable because of the limited land available for development,” Chen added.
The number of potential buyers, searching apartments in Shanghai’s real estate agency, declined by two third sine mid-June, according to Uwin, the real estate information provider.
Xue Jianxiong, chief analyst at Uwin, said “There may be a drop of 10 percent of housing price this year due to the large supply and the shrinking demand.” A six million sq m of new supply and unsold 1 million sq m in the first half will be provided.
“But the individual property owners may not cut their prices a lot because they do not have the liquidity pressure, unlike many real estate developers,” Ho added.
There is a decline in the opening price of some luxury apartments in the city centre. Regency Park, developed by Hong Kong-based Hutchison Whampoa Real Estate, was sold at an average price of 33,806 yuan per sq m in the first two weeks after its opening of 162 apartments on June, a 24.4 drop from the average price between Jan 1 and June 5. Though the company attributed the price decline to the disadvantaged location of the apartments, the price decline of 10,000 yuan per sq m promised potential buyers a housing price correction.
“The weaker buoyant buying sentiment also presented in the high end and luxury segments, causing the typically slow winter buying season to go all the way through the spring,” said Ho.
Prince Hills offered 44 new units for sale with an average price of 60,000 yuan per square meter on April 28 and only sold 7 of them as of June 18. Of the 147 units offered in April, Bund Side in the downtown, 17 had been sold by mid June.
However, the price of most luxury apartments is kept firmly in the weak sentiment. The high-end residential apartments saw a 1.6 percent price rise, and 1.7 of the luxury apartments.
“The prices of luxury villas are expected to rise 6 to 8 percent on average in the next half of 2008 due to the scarcity and strong market demand,” said Chen.
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