Shanghai’s Luxury Property Market Thrives Amid Mass Housing Slump

Shanghai Leads China’s Luxury Real Estate Boom Despite Broader Market Downturn Shanghai luxury property market

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Shanghai’s luxury property market continues to thrive, with investors snapping up high-end homes priced above 30 million yuan (US$4.2 million). Despite a struggling mass housing sector, wealthy buyers see Shanghai’s premium real estate as a safe investment, according to market analysts.

Surge in Luxury Home Sales in Shanghai

According to data from China Real Estate Information Corp (CRIC), over 60% of China’s new homes priced above 30 million yuan were sold in Shanghai in 2023, amounting to 2,530 out of 4,110 units. The city’s prime location and limited high-end housing supply continue to drive demand, even as the broader real estate market faces challenges.

Recent property launches have demonstrated this trend. Earlier this month, 158 units at Kerry Properties’ Jinling Residence, priced between 40 million and 170 million yuan, sold out within 24 hours, generating over 9.2 billion yuan in sales. Located in the prestigious Huangpu district, the development is close to major landmarks such as The Bund, Yu Garden, and East Nanjing Road pedestrian street.

“Compared with homes in less desirable locations, the prices at Kerry’s Jinling Residence seem more reasonable,” said Lu Wenxi, an analyst at Centaline Property Agency. “Shanghai’s luxury property market will maintain its upward momentum.”

Singapore-based CapitaLand also experienced a similar surge in demand last year, selling all 75 flats at its luxury project in Huangpu district within just 45 minutes of launch, generating 3.1 billion yuan.

Investors Flocking to Luxury Properties

The influx of investment into Shanghai’s high-end real estate market can be attributed to several factors:

• Safe-Haven Investment: With low bank deposit rates and a sluggish domestic stock market, wealthy investors view high-end real estate as a safer bet.

• Limited Supply: Premium residential properties in prime locations remain scarce, ensuring strong long-term value retention.

• Growing Interest from Cash-Rich Buyers: “The frenzied buying of luxury flats in Kerry’s new project proves Shanghai’s land remains attractive to wealthy buyers,” said Zhu Xinhai, a sales manager at 5i5j Real Estate Brokerage.

“Rich people believe that property is a safe bet, particularly high-end homes with limited supply,” noted Wang Feng, chairman of Ye Lang Capital.

Mass Housing Market Remains Weak

While the luxury sector flourishes, confidence in Shanghai’s lower-priced housing remains low. Many middle and low-income buyers are hesitant, expecting further price declines. According to CRIC estimates, developers in Shanghai could take over a year to clear existing inventory.

Recent government measures have aimed to boost mass housing demand:

• Mortgage Rate Cuts: In September, the central government urged banks to reduce mortgage rates by 0.5 percentage points.

• Relaxed Homebuying Restrictions: In October, Shanghai eased property rules, allowing residents from other parts of China with at least one year of local tax payments (previously three years) to buy homes.

• Lower Down-Payment Requirements: Minimum down-payment ratios were reduced for both first-time and existing homeowners.

However, these efforts have yet to significantly revive the mass housing sector. Data from Jiwu.com shows that in March 2024, the average price of pre-owned homes in Shanghai was 56,352 yuan per square meter—unchanged from the previous month but down 4% year-on-year.

China’s Real Estate Crisis Continues

China’s property sector has faced severe challenges since 2021, with more than 50 developers defaulting on US$100 billion in offshore bonds between 2022 and 2023, according to a JPMorgan report. Housing sales and new construction have steadily declined amid weak consumer confidence.

Shanghai’s luxury real estate market remains a rare bright spot in China’s struggling property sector. While wealthy investors continue to fuel demand for high-end homes, the broader mass housing market still faces uncertainty. Government policies may help stabilize the industry, but confidence among mid- and low-income buyers remains fragile.

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