Sales of luxury property surge in shanghai

The latest report from Knight Frank shows that the number of completed transactions in the second quarter of the year were 39.6 per cent higher than the first quarter of the year and 12.6 per cent higher than the same period in 2012.

Despite this surge in demand, though, prices remained flat. The rise in interest is attributed to a growing number of MNC expatriate employees searching for homes to secure their children’s admission into schools. As a result, vacancy rates in the luxury residential market fell 0.5 per cent to 4.1 per cent quarter-on-quarter.

 At the same time, the supply of luxury homes jumped 4.3 per cent quarter-on-quarter, while transaction volume in the second quarter rose to 148,000 square metres, a new high for 2013 and a rise of 12.9 per cent year-on-year.

The most popular price bracket is between RMB50,000 per sq m and RMB70,000 per sq m, which saw demand increase in the second quarter. Indeed, the bracket now accounts for 70% of total luxury residential sales in Shanghai.

“In the second quarter, there was no new housing regulations imposed on the market, and some details in Shanghai’s local guidelines of “New Five National Measures” have yet to be clarified,” comments the report. “As a result, the impact of regulations on the residential market has been somewhat limited. Meanwhile, the recently held State Council Executive Meeting made clear that the policy will support credit requirements for first home-buyers. “

Supply, demand and prices are all expected to increase in the near future, predicts the report.

In the second half of 2013, several serviced apartment developments will be launched onto the market, which Knight Frank predicts will ease the tight supply in both luxury rental and sales markets.

“Along with the expected increase in the number of MNC expatriate personnel arriving in Shanghai during the third quarter, the occupancy rates and luxury residential housing rents will [also] increase,” adds the report.

“Furthermore, in the sales market, we expect that luxury residential units in core areas will continue to be sought after and that prices will continue.”