Business / Industries

Gains on cards for high-end property sector in Shanghai

By Wu Yiyao (China Daily) Updated: 2015-02-11 08:22

Gains on cards for high-end property sector in Shanghai

A high-end residential area in Shanghai Nov 20, 2010

Apartments, villas with small floor area to offer better rental income for

investors, say analysts

Demand is likely to increase through 2017 in the high-end residential market in Shanghai as buyers' needs shift and investor sentiment recovers with the improving market climate, property services provider Savills said in a report on Tuesday.

"As Shanghai's central business districts emerge in various areas in the city, demand for high-end residences in such regions has been growing fast. We estimate that the average price and sales revenue of high-end residences may increase in the next few years," said Siu Wing Chu, head of residential sales with Savills in Shanghai.

As of Dec 31, sales of high-end residences accounted for 9 percent of the market in the city, compared with 1 percent in 2005.

Chu said sales of existing high-end residence projects, including villas and large apartments in premier locations, began recovering during the fourth quarter of 2014.

The number of wealthy Shanghai residents, defined as those with a net wealth of more than 10 million yuan ($1.62 million), has been rising steadily and now reaches 160,000, which increases purchasing power in the high-end residence market, according to Savills.

In 2005, the highest price for an apartment was 60,800 yuan per square meter. As of last year, the figure had risen to 242,000 yuan per sq m.

Demographic changes and urbanization have created demand for high-end residences, with the younger generation favoring apartments with mature facilities including shopping and schools.

The elderly prefer more spacious, suburban villas, according to Chu.

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