Shanghai approves city’s most expensive homes amid downturn

SHANGHAI — China’s financial centre, Shanghai, is allowing 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 can set prices as high as 298,000 yuan (S$59,700) per square metre for its high-end residential properties, said the website of the city’s real estate trading centre. This is a record asking price for the metropolis, said SouFun Holdings, China’s biggest real estate website, and realtor Centaline Group.

Chinese developers are required to obtain approval from the government and register their sale price at the local housing authority.

“This is a kind of policy-easing, as the government is trying to boost buyers’ confidence,” said Mr 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 in the market caused by the government’s four-year effort to rein in prices and stamp out speculation. Home sales from January to May slumped 10 per cent from a year earlier, a stark contrast to the 27 per cent surge last year, even though developers have 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 home prices. 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 deemed too high by local officials.

Shanghai on Wednesday sold a 6,885sqm plot in the city’s downtown area for 577 million yuan, implying a cost of 85,513 yuan per sqm of buildable space, the most expensive in the country, China Securities Journal reported yesterday, without citing anyone. BLOOMBERG