While ordinary residential property market in Beijing is warming up from a frosty 2014, luxury apartment market is sizzling, experts said on Thursday.
By the end of July, a record 148 apartments with a sale price of more than 100,000 yuan ($16,100) per square meter were sold in the national capital, the highest in Beijing's property market history, according to Centaline Property Agency.
That number dwarfed the previous peak seen in 2011, during which just 28 units of such homes were sold. Combined sales of such homes from 2009 to 2014 was just 113 units.
According to Yahao Real Estate Selling &Consulting Solution Agency, the top seller in the first half of this year was Wanliu House, a luxury residence in Haidian district that was developed by Sinobo Group Co Ltd. The project was put on sale at the beginning of this year with an average price of 135,000 yuan per sq m, usually with a floor space of 200 to 500 sq m.
This project alone sold 24 units as of early July. All the top 10 projects are located in Beijing's main urban district, with an average price of no less than 81,000 yuan per sq m.
The transaction surge was mainly driven by growth in supply and demand. The municipal government had earlier this year eased price caps for developers, an action which saw the rollout of several projects that were previously put on hold. The recovery in the city's overall property market also emboldened developers to sell high-priced apartments.
From the demand side, sources with Yahao said, loosening of various purchase restrictions, monetary easing, and the emergence of "land kings" (those developers who purchased land at record prices) spurred buyers' interest and pushed up expectation of price-rise.
The rally in the capital markets during the first six months of this year also created more millionaires and billionaires. The subsequent market rout saw most of them shifting their focus to the property market.
"Many wealthy people also realized that land available for sale in the prime areas of Beijing is becoming more and more scarce, a factor that could push up prices significantly in the long run," Guo said.
The surge in "luxury residence" sales is also offering new insights on what people perceive as "luxury". In 2009, Sinobo Group raised the market ante when it offered a luxury project in Beijing at a price above 100,000 yuan. Though such projects are still considered "luxury", they no longer raise eyebrows.
"Many projects are using high offer prices to create a sensation. When we talk about 'luxury apartments', we only look at the actual transaction price," Guo said. "What's more, now we look at total value of a property, instead of the unit price, to judge whether it is 'luxury' or not."
For example, a 60 sq m home was sold at 90,000 yuan per sq m but that does not count as "luxury". A total price of 20 million yuan is the "starting price tag" while a total price of more than 30 million yuan is a typical "luxury" offering, Guo said.