China Real Estate Round Up 2010-12-29

Here’s another review of recent real estate news from Colliers’ Market Beat.  The lead story today is the recent declines in share prices for China-related property developers, ever-increasing house prices in Shanghai, and some local officials attempting to explain how a luxury villa development was secretly built in a public park without their knowledge.

REAL ESTATE EQUITIES

Shares Slide in Asia in Response to Recent Rate Hikes

Markets responded to the recent interest rate hikes in China on Tuesday as Hong Kong’s Hang Seng Index fell 0.9% to 22,622, and China’s Shanghai Composite Index tumbled 1.7% to 2,733. China’s leadership has recently placed renewed emphasis on controlling inflation and interest rates were raised by 25 basis points on December 25^th. Hong Kong developers also slid lower with New World Development plunging 2.7%, Hang Lung diving 2.5%, Henderson Land dropping 1.6 and Cheung Kong falling 1.4%. There were also significant drops in shares of Chinese developers with Poly Real Estate diving 6.2%, Gemdale slumping 5.4% and China Vanke plunging 4.8%. Among other challenges for the red-hot Chinese property market, officials are now reviewing proposed policies restricting foreign investment in Chinese real estate, including requiring buyers to own land for longer time periods before selling it and taking profits.

From Daily Finance

RESIDENTIAL

Shanghai New Home Prices Hit 7-month High

The average price of new homes in Shanghai shot to a seven-month high of RMB 24,476 per sq m last week amid government pledges to finally bring down housing prices following repeated failures. New homes, excluding subsidised housing and homes for relocated families, were sold at an average price of RMB 24,476 per sq m from December 20-26, the highest rate since May 10^th of this year. Although thee is still a week remaining in the year, the price hike has already pushed up the average price for 2010 to more than RMB 20,000, a 32 % increase from 2009. Last year the city’s home price gained 16 % compared to 2008. According to recent market data, seven out of fifteen housing developments entering the market last week were high-end residential buildings. The average price for these developments was more than RMB 30,000 per sq m with the top price approaching RMB 100,000.

From The Shanghai Daily

New Villas on Nanjing Heritage Site Declared Illegal

Newly built villas in the protected heritage district surrounding the Sun Yat-Sen Mausoleum Park in Nanjing, were declared illegal by local officials on Monday.Construction of the villas by the Jiangsu Deji Group took more than a year. The officials said the developer had not obtained the proper approval from authorities to build the villas inside the Sun Yat-Sen Mausoleum Park, which is a protected national natural and cultural heritage site. According to regulations, commercial real estate development inside the area has been banned since 2004. New construction or modifications of existing buildings must be approved by authorities including the park’s administrative bureau. “Construction of the new villas was never declared to the administrative bureau of Sun Yat-Sen Mausoleum Park, nor was it approved by the city’s planning authority,” said Liao Nan, head of the park’s publicity department.

From The People’s Daily

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