Shenzhen property market off to a roaring start for 2016

A view of a construction site in Shenzhen's Qianhai. Shenzhen had overtaken Shanghai and Beijing from June last year, staying at the top of average real-estate prices for half a year, according to a recent report. But experts have mixed views on the direction the city's property market is heading. Parker Zheng / China Daily

Shenzhen's property market greeted the New Year with a bang as buyers snapped up all 72 apartments at a new residential project in the city's northwestern district of Bao'an within hours of its launch just after midnight last Thursday.

The craze took the market by surprise, but experts believe that the pace of growth of the city's housing sector will slow down this year following its heady boom in 2015.

The strong response coincided with monthly data from Fang.com - a influential real-estate website on the Chinese mainland's - indicating that Shenzhen homes have become the country's most expensive, with prices having shot up almost 40 percent last year, overtaking those in two other first-tier cities - Beijing and Shanghai.

Deng Yunhong, a researcher of Midland Realty Research Center - one of Hong Kong's biggest property agencies - predicted a 10-percent overall increase in prices of new housing projects in Shenzhen, and a rise of 10 to 15 percent for resold properties.

Midland Realty said the percentage increase last year was 58.4 percent, with average prices at 33,353 yuan ($5,105.8) per square meter, up by 39.1 percent within one year.

Zheng Shulun, general manager of Centaline Property in Shenzhen, agreed that 2016 will not see a carbon copy of last year's trend, and future price rises will be narrowed.

He said Shenzhen's real-estate market tends to be "rational" this year as a result of the stock-market turbulence, currency rate risks, a cut in inventories, and driven by the fact that 20 percent more new properties will be coming on stream in 2016.

Midland Realty also estimates that the market will see an increase of 5.5 million square meters in housing area in the market, concentrating on the upscale residential district of Nanshan and the areas around the Guangdong free trade zone (FTZ), such as Qianhai, Houhai and Shekou.

However, Deng disagreed that the increase in new homes supply will substantially influence Shenzhen's property sector.

She said the city's real-estate market needs about two to three years to digest what she called the "crazy" surge in 2015, with prices having reached a "false" high level.

Midland Realty expects Shenzhen's housing loans to break the 600-million-yuan mark for 2015. The city's population, which makes up just 1 percent of the national population, accounted for 5 percent of the country's total housing loan credit extended, or 11.5 trillion yuan, in 2014.

Shenzhen media had predicted last year that homes prices in Shenzhen would soon be on par with those of Hong Kong, but Deng believes there is still a huge gap. Shenzhen homes remain a target for many Hong Kong investors as prices in the SAR are expected to fall this year.

Real-estate advisory firm DTZ/Cushman & Wakefield sees Hong Kong's mass residential homes prices shedding by 5 to 8 percent in the first half of 2016.

New private homes transactions in Hong Kong fell to 16,000 cases in 2015 - down 10 percent over the previous year - while the volume decreased 4 percent, according to Centaline Property.

Deng said Qianhai and Shekou may become the next hot spots for investment as more Hong Kong investors realize the economic benefits deriving from the Hong Kong-Shenzhen cooperation-oriented Guangdong FTZ. Despite the strong housing indicators, Deng warned Hong Kong investors that the risks in Shenzhen's real estate would grow this year.

grace@chinadailyhk.com

(HK Edition 01/05/2016 page7)