China's booming property sector may be about to slow some time this year.[China Daily] Fengtai property may retail for 30,000 yuan per sq m
Property prices may have hit a new high in one Beijing district after China Overseas Property Co Ltd snapped up a parcel of land for a staggering 17,153 yuan ($2,512) per sq m yesterday.
China Overseas Property, one of the country's largest real estate firms, paid 5.97 billion yuan for the 348,000 sq m piece of land.
The closing price was 200 percent higher than the owner's original asking price, thus pushing property prices to a record high in Beijing's Fengtai district.
Despite government efforts to cool down the overheated property market, Shenzhen-based Vanke and Shanghai-listed Poly Real Estate were among 14 developers jostling over the plot, located near the southwest side of Beijing's Fourth Ring Road.
"Even with a conservative estimate, the selling price of residential units on this plot will surpass 30,000 yuan per sq m," said Meng Qi, a market analyst with US-headquartered real estate brokerage, Century 21.
Neighborhood apartment prices currently range from 17,000 yuan to 18,000 yuan per sq m.
"The appearance of the new pricing high indicates real estate companies are still optimistic about property sales this year," Meng said.
After intensive efforts by the government to tighten real estate policies, most property developers haven't changed their strategies and still plan to raise prices.
William Kwok, director of Cheung Kong Real Estate Limited, said his firm will likely increase the price of a residential property project in Beijing by 10 to 15 percent, but sales will target homeowners and not speculators.
Moreover, Cheung Kong plans to offer more Hong Kong properties to domestic investors, hoping to capitalize on the growing buying power of mainland residents. For instance, the company has recently began pitching a commercial property in Tsim Sha Tsui district called "1881 Heritage" to lure buyers in Beijing and Shanghai.
According to Kwok, China's property prices are likely to stabilize in 2010 after a stronger-than-expected rebound last year. "In cities where the price has soared more than 50 percent in 2009, a price adjustment may occur, but a tumble is not likely to happen given that demand remains robust," he said.
The marketing manager of a medium-sized property developer told China Daily his firm raked in 2 billion yuan last year, far exceeding its target of 1.5 billion yuan. Therefore, the firm is in no rush to sell new apartments.
China's major cities saw a uptick in real estate sales last week after experiencing a drop in transaction numbers triggered by the government's tightening of property policies, according to a report from the China Index Research Institute.
In 32 key cities monitored by the Institute, 20 saw an increase in property sales over the previous week, with sales in Guangdong province's Dongguan up 150 percent, Zhejiang province's Zhoushan up 70 percent and Sichuan province's Chengdu up 75 percent.
