Shanghai’s wealthy residents upgrade to premium homes, ignoring property market upheaval

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Sales of newly launched luxury homes jumped 39 per cent to 1,544 in the first half of the year, according to China Real Estate Information Corp

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An aerial view of Shanghai, where the sales of luxury homes are on the rise. Photo: EPA-EFE

Daniel Renin Shanghai

Published: 12:15pm, 11 Aug 2024Updated: 2:45pm, 11 Aug 2024

Luxury homes in Shanghai are defying the downtrend in China’s mass market segment as wealthy buyers, relatively unscathed by the multi-year industry slump, upgrade to newly built units in prime locations, according to analysts.

Most high-net-worth individuals believe the land scarcity and long-term economic growth potential of the mainland’s commercial and financial hub will continue to fuel price increases of expensive flats.

A total of 1,544 luxury homes were transacted in Shanghai in the first half of the year, a 39 per cent increase from the same period last year, according to data from China Real Estate Information Corp (CRIC). About 90 per cent of them were sold on the primary market, according to You Liangzhou, owner of property agency Baonuo in Shanghai.

Luxury residential units refer to homes that are priced at more than 30 million yuan (US$4.2 million). In Shanghai, most of the super-expensive flats are located in the city centre, such as Huangpu and Xuhui districts, while villas can be found in suburbs like Qingpu.

Flats in downtown areas are normally priced at 200,000 yuan per square metre, which is equivalent to a white-collar clerk’s annual salary.

“New housing projects that started selling this year have attracted wealthy people,” said Shirley Tang, senior director of residential sales at Savills Shanghai. “We have seen a strong desire among wealthy buyers to replace old units. They have put behind worries about a stock market downturn and they have sufficient cash to upgrade their housing.”