Luxury properties not selling as well as mid-priced ones in China

Most of the capital’s luxury real estate projects are encountering poor sales even in the back-to-boom market, industry insiders revealed.

Nearly 70 per cent of the property for sale in the 30 most expensive developments remain on the market, where some have languished for more than four years, according to Beijing Times.

Figures from the Beijing real estate trading management website, an official portal run by the Beijing Municipal Commission of Housing and Urban-Rural Development, revealed that sales of new houses increased by 7.3 per cent in August compared to July, while used houses increased by 14.3 per cent in the same period.

Although most real estate analysts say that the city’s property market has been “going back to boom”, luxury housing sales are the exception.

An attractive residential project, Xia Gong Fu, has created a new record for its “sky-high” price of 100,000 yuan per sq m.

The project, which includes 72 apartments, is in the Wangfujing area north of the Beijing Hotel.

A saleswoman with the project, who asked not to be named, said many people have called to make appointments to take a look, but few have decided to buy.

“We only arrange six groups of guests to visit the show flat every day and each group is limited to fewer than three people,” she said.

“No Western expatriates are calling us and most of the visitors are Chinese, plus a few overseas Chinese.”

According to the latest information on the Beijing real estate trading management website, none of the 72 apartments in the complex had been sold as of Wednesday.

Another luxury resident project, Xi Rui Du, which is located near the East Third Ring Road, is going for 70,000 yuan per sq m. It has sold only 14 per cent of its units, according to the website.

Zhang Yue, a market analyst at Homelink, one of Beijing’s largest real estate agencies, said the sale of high-end property is different from middle- and low-end housing due to the difficulty of matching supply and demand.

“Luxury property buyers already own houses, so the sales cycle of such projects are normally several times longer than low-end residential projects,” she said.

Zhang said she did not foresee expensive projects having an impact on Beijing’s real estate market, which is largely geared to ordinary buyers who are waiting to see the effects of government measures to cool the overheated market before they take the plunge and buy.

Chen Zhi, deputy secretary-general at the Beijing Real Estate Association, said the local government will continue its current policy aimed at dampening the city’s property market.

“Due to a time lag, a clearer trend of home price decreases may become apparent later this month,” he said.

Source : China Daily/Asia News – 3 Sep 2010

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