[photopress:Peace_Garden_in_Shanghai.jpg,full,alignright]The rent of luxury residences in Shanghai has dropped for the first time in at least five years. This drop in rents cane came as the government’s tightened rules on foreigners’ property investment became effective.
According to Colliers International, a real estate service company, the average rents of luxury residences, including apartments, serviced apartments and villas, declined 3.6% in the fourth quarter from the same period in 2005. Worst hit were the luxury apartments with a 12.1% drop in rents and a 19.1% rise in vacancy rates in the fourth quarter.
It was not all downhill. The serviced-apartment sector, benefiting from an increase in business travelers and shortages of high-end hotels, saw average rentals jump to $34 per square meter a month at the end of the year. And the rents of luxury villas rose 3.6 percent to US$21.4 per square meter a month in the fourth quarter.
Foreigners are now allowed to buy only one apartment for self-use after having lived in China’s mainland for at least a year.
Lakeville Regency in the Xintiandi area, developed by Hong Kong’s Shui On Group, sold only 54 units in the fourth quarter, compared to 70 units in the previous three months.
Wellington Garden on Huaihai Road West, developed by the Wharf Group, sold only 13 units in the fourth quarter.
Analysts forecast that prices for luxury and high-end apartments should remain steady, while transaction volumes will decline further due to the restrictions on foreign buyers. This seems to defy logic as a projection. If the transaction volumes decline then it follows the prices will drop at the same time.
Source: Shanghai Daily