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The Star
2 days ago
- Business
- The Star
Shanghai's luxury home sales boom as wealthy buyers flock to ‘safe haven' assets
Luxury home sales in Shanghai are defying a nationwide slump, as wealthy buyers snap up 'safe haven' assets amid expectations of further price gains – a trend likely to continue given scarce inventory and rising land costs. In the first half of this year, the mainland's financial capital led in transactions of premium homes, accounting for sales of 482 new homes priced above 50 million yuan (US$7 million), more than 80 per cent of the total across 30 cities, according to data compiled by China Real Estate Information Corporation (CRIC). For homes priced above 30 million yuan, transactions in the city reached 1,096 units, accounting for 60 per cent of the 30-city total. Two other tier-one cities, Beijing and Shenzhen, followed with 12 per cent and 11 per cent, respectively, the research institute added. Nationwide, sales of new homes priced above 50 million yuan jumped nearly 50 per cent from a year earlier to 591 units, while sales of lived-in units in the same price category increased 43 per cent to 173 in the same period, according to CRIC. The surge was underpinned by both demand and supply factors, analysts said. On the demand side, Shanghai's premium homes were emerging as a 'clear safe-haven asset, offering stability amid relatively high risks in other cities', said Lu Wenxi, an analyst at Centaline Property in Shanghai. 'Given the scarcity of residential properties in the city centre and the solid fundamentals of the homes themselves, investing in premium homes makes sense from both a risk and value-appreciation perspective,' he added. 'After all, there aren't many options for those with capital to deploy.' On the supply side, a policy move last June to scrap the cap on land prices in Shanghai has also helped to sustain the value of properties. Leading developers continue to focus their land acquisitions in prime locations within core cities 'as reflected in the rising land premium rates this year in tier-one and strong tier-two cities', said Shi Lulu, director of Asia-Pacific corporate ratings at Fitch Ratings. New home sales in China were expected to decline by about 15 per cent this year, according to an earlier forecast by Fitch. 'Premium projects in top-tier cities are expected to provide ongoing support for the performance of upgrade-oriented sales,' she said, adding that growth in the high-end segment could help the property sector temper the slowdown. Centaline's Lu said Shanghai's premium home prices would continue to rise. 'Land in the city centre is running out,' he said. 'With no land available, demolition becomes necessary, but the costs of demolition and relocation are rising each year, and housing price expectations are getting higher as costs increase.' Shanghai was also one of China's only cities that managed to defy a broad-based decline in new home prices in June, as the country's property slump is set to enter its fifth year, despite official measures to support the sector that once accounted for a quarter of the country's gross domestic product. Nationwide, new home sales fell to 9.7 trillion yuan in 2024 – less than half the level recorded in 2021, according to government data. - SOUTH CHINA MORNING POST
South China Morning Post
7 days ago
- Business
- South China Morning Post
Shanghai's luxury home sales boom as wealthy buyers flock to ‘safe haven' assets
Luxury home sales in Shanghai are defying a nationwide slump, as wealthy buyers snap up 'safe haven' assets amid expectations of further price gains – a trend likely to continue given scarce inventory and rising land costs. Advertisement In the first half of this year, the mainland's financial capital led in transactions of premium homes, accounting for sales of 482 new homes priced above 50 million yuan (US$7 million), more than 80 per cent of the total across 30 cities, according to data compiled by China Real Estate Information Corporation (CRIC). For homes priced above 30 million yuan, transactions in the city reached 1,096 units, accounting for 60 per cent of the 30-city total. Two other tier-one cities, Beijing and Shenzhen, followed with 12 per cent and 11 per cent, respectively, the research institute added. Nationwide, sales of new homes priced above 50 million yuan jumped nearly 50 per cent from a year earlier to 591 units, while sales of lived-in units in the same price category increased 43 per cent to 173 in the same period, according to CRIC. Property models are displayed at a real estate sales office in Shanghai. Photo: China News Service/VCG via Getty Images The surge was underpinned by both demand and supply factors, analysts said. On the demand side, Shanghai's premium homes were emerging as a 'clear safe-haven asset, offering stability amid relatively high risks in other cities', said Lu Wenxi, an analyst at Centaline Property in Shanghai. Advertisement 'Given the scarcity of residential properties in the city centre and the solid fundamentals of the homes themselves, investing in premium homes makes sense from both a risk and value-appreciation perspective,' he added. 'After all, there aren't many options for those with capital to deploy.'
Yahoo
30-06-2025
- Business
- Yahoo
China Home Sales Slump Persists as Calls Grow for More Stimulus
(Bloomberg) -- China's home sales extended their slump in June, putting further strain on the economy and underscoring the impetus for fresh support measures. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sao Paulo Pushes Out Favela Residents, Drug Users to Revive Its City Center Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown The value of new-home sales from the 100 largest property companies stood at 339 billion yuan ($47.3 billion), the latest preliminary data from China Real Estate Information Corp. on Monday showed. That represents a 23% fall from a year ago, according to Bloomberg calculations. June's sales follows an 8.6% decline in May. On a monthly basis, however, the latest sales were up 14.7% from May, CRIC said. China's housing downturn has dragged on for four years, as the effects of a stimulus blitz last September wear off. Premier Li Qiang this month pledged more action to revive the market, which analysts say is necessary to boost consumption and offset the threat to exports from US tariffs. 'More support will be needed, but we don't expect a big shift in approach' to housing, Duncan Wrigley, chief China economist with Pantheon Macroeconomics, wrote in a report last week. 'China is resigned to a slow recovery.' Even if China's housing market picks up, the long-term outlook remains grim. Demand for new homes in cities is expected to stay at 75% below its 2017 peak in the coming years, due in part to a shrinking population, Goldman Sachs Group Inc. estimated. --With assistance from Foster Wong. America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 Does a Mamdani Victory and Bezos Blowback Mean Billionaires Beware? ©2025 Bloomberg L.P. Sign in to access your portfolio
Business Times
06-06-2025
- Business
- Business Times
Falling sales offer few signs of end to China's property slump
FALLING property sales over the first five months of 2025 show how China's economically important real estate market remained stuck in a slump this year despite signs of heat in the markets in higher-tier cities. Cumulative sales of China's top 100 property developers from January to May fell 7.1 per cent year-on-year to 1.3 trillion yuan (S$233.2 billion), accelerating from the 6.7 per cent drop for the January-to-April period, according to figures published Saturday by China Real Estate Information Corp (CRIC). The CRIC report measures sales from projects directly managed by the top 100 developers, excluding projects including those run by external partners. Figures released by another data provider for the industry, China Index Holdings (CIH), painted a similar picture. Total sales of the top 100 property developers for the first five months were down 10.8 per cent year-on-year to 1.4 trillion yuan, according to a recent CIH report. In the CIH report, sales included revenue from projects managed by both developers' in-house sales teams and those outsourced. For May alone, sales by top developers fell 8.6 per cent year-on-year to nearly 295 billion yuan, although the total was up 3.5 per cent on a month-on-month basis, according to CRIC figures. The CIH data showed an even steeper year-on-year sales drop of 17.3 per cent for May, with the decline widening from 16.8 per cent in April. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up To put the scale of the downturn in perspective, sales of 1.3 trillion yuan amount to less than 30 per cent of the total made over the first five months of 2021, before the slump began. The May sales figures offer a broader view of a national real estate market that has grown increasingly bifurcated. Analysts have been highlighting the difference in demand between metropolises such as Beijing and Shanghai and in lower-tier Chinese cities. In Shanghai, demand looks to be heating up. According to a report by EH Consulting, a real estate industry research institute, multiple residential projects managed to sell out in a single day in May. In one example, a local subsidiary of developer Greentown China Holdings sold all 120 units of a project on the same day it was put on the market, the report said. The homes sold for 195,000 yuan per square meter, generating nearly 7 billion yuan in revenue. It's a different story in some of China's lesser-known and less wealthy cities. The vast majority of property developments in third and fourth-tier cities have far more supply than demand, said a senior sales executive at a leading property developer who did not wish to be named. Two factors have long helped drive China's property market: the need for new homes and the belief that housing was a sure-fire investment. Since the downturn, however, residential property has lost its appeal as an investment in many third- and fourth-tier cities, the executive said. In addition, basic housing needs have already been met in those areas. With the populations of many of the cities already starting to shrink and with the average household already owning two or three homes, a slowdown in home sales was inevitable 'In the long run, we believe the property market will eventually stabilise,' the executive said. 'But in the near term, market divergence will persist.' Addressing the disparity requires tackling the problem from both the supply and demand sides, market insiders said. The CRIC report noted that the current new housing supply has fallen significantly, particularly in hot markets such as Shanghai, Shenzhen, Hangzhou and Chengdu. The situation has limited the potential for a surge in sales volume in those cities. Changes to government policy could help. The EH Consulting report recommended shifting from broad-based stimulus to more targeted, nuanced regulation over the property market. That would help different parts of the market achieve a better balance between supply and demand that would eventually stabilise prices. CIH expects housing market policy to remain accommodative in June. With the mid-year sales window approaching, property developers are likely to accelerate project launches and increase their marketing efforts, the report said. It added that the market in core cities is expected to continue its recovery, although divergences between cities are likely to continue. CAIXIN GLOBAL
Hindustan Times
02-06-2025
- Business
- Hindustan Times
China is waking up from its property nightmare
CHINA'S ECONOMY has been through a stress test in the past six months with the trade war shredding nerves. The tensions over tariffs are not over yet. On May 29th Scott Bessent, the Treasury secretary, said that ongoing talks had 'stalled' and President Donald Trump complained that China 'had totally violated' the preliminary agreement to reduce duties reached between the two sides in Geneva on May 12th. Yet even as the trade war staggers on, two things are proving reassuring for China. One is that so far the economy has been resilient. Private-sector growth estimates for 2025 remain in the 4-5% range. The other is that one of China's biggest economic nightmares seems to be ending: the savage property crunch. To get a glimpse of that, consider a gated home in Shanghai's Changning district. It has an air of traditional German architecture and a large front garden, a feature of the city's most ritzy neighbourhoods. But what really stands out is the price. On May 27th the property sold for a stonking 270m yuan ($38m), creating a sensation in the Chinese press. At 500,000 yuan per square metre, it is one of the priciest home auctions in recent memory. That the wealthy are prepared to pony up such an exorbitant price is being interpreted as a sign that China's huge and interminable property crisis might finally be ending. Speculation about a turnaround has been building over dinner tables, in boardrooms and at state-planning symposia. The excitement is hardly surprising. Property, broadly defined, contributed about 25% of GDP on the eve of its crash in 2020. It now represents 15% or less, showing how the slump has been a huge drag on GDP growth. The depressive impact of falling prices on ordinary folk is hard to overstate. In 2021 80% of household wealth was tied up in real estate; that figure has fallen to 70%. Hundreds of developers have gone bust, leaving a tangle of unpaid bills. The dampening of confidence helps explain sluggish consumer demand. But while the market is still falling, for the first time since the start of the crisis, you can make a decent case that the end is in sight. In the first four months of 2025 sales of new homes by value fell by less than 3% compared with the year before. In 2024 the decline was 17%. Transactions will continue to drop only modestly for the rest of the year, reckon analysts at S&P Global, a rating agency. One of the biggest problems was that millions of flats were built but never sold. Last year as many as 80m stood dormant. Now in the 'tier-one' cities of Beijing, Shanghai, Guangzhou and Shenzhen, that problem is easing. At the end of January the inventory held by developers in those cities would have taken around 12 and a half months to shift at current sales rates, according to CRIC, a property data service. That is down from nearly 20 months in July 2024, and not far from the average of ten months in 2016-19 across the country's 100 largest cities. In other words, the overhang is starting to look less terrifying. Shanghai's renaissance illustrates the trend. Transactions rose slightly each month from February to April compared with the year before, making it one of the few cities where prices have risen year on year for months in a row. It still has controls over who can buy properties and how many. But luxury homes are starting to be snapped up quickly, says Ms Fang, an estate agent. The prices of standard properties will probably continue to grow this year, she says, but the most expensive homes are increasing in value even faster. What explains the bottoming out of the market? Partly, just the passage of time. The average housing crash takes four years to play out, according to a study by the IMF of house-price crashes around the world between 1970 and 2003. Officials in Beijing started deflating the bubble by tightening developers' access to credit in mid-2020 and investors started to panic about the solvency of the monster developers at the end of that year. But as well as time, the government is more determined than ever to put an end to the downturn. Local governments have been encouraged to buy unused land and excess housing with proceeds from special bonds. Some are handing out subsidies for buying homes. A plan to renovate shantytowns could create demand for 1m homes. The central bank cut interest rates in May, reducing mortgage rates for new home purchases. This has boosted property sales activity, says Guo Shan of Hutong Research, a Beijing-based consulting firm. There are still dangers. The trade war is a drag on confidence. Home prices across 70 cities surveyed by the National Bureau of Statistics declined by about 2% in April from a month earlier. Sales of new homes and the starting and completion of housing projects all fell month on month. Fewer cities in April notched month-on-month price increases compared with the month before. Things are not getting much worse but they will probably not get better without more government support, says Larry Hu of Macquarie, an investment bank. In Wenzhou, a manufacturing city on China's southeastern coast, price declines are still sharp. Locals say the trade war with America is shaking confidence. Mr Zhou, a restaurant owner, says the official data do not capture huge discounts of more than 50% on some new homes in overbuilt areas. He blames a manufacturing downturn, and Mr Trump's trade war. In all probability the crisis is over in big rich cities, such as Shanghai, but may last longer in smaller cities, such as Wenzhou. New-home prices in first-tier cities will be flat this year and increase by 1% next year, according to S&P. But in third-tier cities and below they will fall by 4% this year and 2% next. Small cities are full of unwanted homes. China is escaping its property nightmare. Even so, the Communist Party must ensure it is not only big-ticket mansions in Shanghai that look appealing. Get 360° coverage—from daily headlines to 100 year archives.
