Chengdu News

GROWING METROPOLIS: A Chinese woman looking at a scale model showing how Shanghai will look in the year 2020.


Locals are snapping up real estate in Beijing, driving up prices by over 40 per cent in the past 3 years

By Clarissa Oon, China Correspondent

BEIJING - IN NORTH-EAST Beijing, luxury Western-style villa developments with names like Yosemite and Chateau Regalia have mushroomed as the city experiences an unprecedented building boom.
Hundreds of such villas and townhouses have been built in the satellite town of Shunyi, which was just farmland over a decade ago.

Today, the well-heeled neighbourhood includes artificial lakes, golf courses, international schools, shops, restaurants and office blocks.

A 500-sq-m villa at Yosemite, one of the hottest developments in Shunyi, can fetch around US$1.35 million (S$2.1 million), comparable to a similar-sized property in a major American city, say industry insiders.

The prices reflect the hot real estate market in the Chinese capital, where property prices have shot up more than 40 per cent over the past three years.

What is more, most of the owners of the Yosemite villas are not foreigners but wealthy Chinese from Beijing or other northern provinces who rent the houses to expatriates.

'Foreigners and people from Hong Kong, Taiwan and Macau make up only 15 per cent of buyers in China's luxury residential market,' Ms Anna Kalifa, head of research at property brokerage Jones Lang LaSalle, told The Straits Times.

'The majority are mainlanders with cash to burn who usually buy multiple units.'

Analysts say China's property market shows no sign of cooling despite recent government measures to dampen speculation and sky-rocketing housing prices.

With rising incomes and a volatile stock market, real estate remains one of the few surefire investment bets for middle- and upper-class Chinese.

'In the long run, the fundamental demand is still strong, so we will still see good growth in the property market,' said Mr Howard Zhang, vice-president of Citygroup Property Investors.

But some observers are concerned that the real estate boom is unsustainable.

Reports show that rich buyers are pushing up prices while more than 70,000 low-income families in Beijing cannot afford a home of their own.

Developers are now required to increase the number of smaller-sized units in each new project to make it more affordable to average buyers, as part of government macroeconomic controls imposed on the sector last year.

To control speculation, a tax has been levied on residential properties sold within five years of purchase.

However, these measures have not stopped real estate prices in Beijing from jumping 42 per cent over the past three years, said a report by news website Sina.com and New Real Estate Magazine.

More than 103 billion yuan (S$20.3 billion) in investments flowed into residential projects in China in the first 10 months of last year. This is a 28.4 per cent year-on-year increase, said real estate services firm Cushman and Wakefield.

Apart from having one of the country's fastest-growing property markets, Beijing is in the throes of a construction frenzy as developers rush to complete projects ahead of next year's Olympic Games.

According to property brokerage CB Richard Ellis, more than 2 million sq m of office space and 3 million sq m of residential space will hit the market over the next two years, five times as much as last year.

Upcoming behemoths include the world's largest architectural project - the funky CCTV Tower, which will house 550,000 sq m of studios, offices, exhibition halls and a five-star hotel.

In contrast, financial hub Shanghai's property boom has been dented slightly by last year's macroeconomic controls.

Ms Kalifa of Jones Lang LaSalle's Beijing office said Shanghai's market had traditionally seen more short-term speculators, who have been hit by rising interest rates as well as the tightening of red tape on sales transactions.

Construction Ministry figures show a small drop in Shanghai's property prices last year, while property prices increased by 6.6 per cent on average across China.

The average price of pre-sale housing in Beijing is now 7,825 yuan per sq m, closing in on Shanghai's 8,665 yuan per sq m.

Away from these two metropolises, analysts are keeping an eye on buoyant property markets in emerging second-tier cities like Tianjin, Dalian, Hangzhou and Chengdu.

Mr Chris Brooke, president and CEO of CB Richard Ellis in Greater China, also highlighted very strong demand in China's retail property market as Chinese and foreign retailers look to expand operations across major Chinese cities.

clare@sph.com.sg