--- title: "Observation on Shanghai luxury housing market: Short-term supply surge, mid-to-long term direction remains unclear" description: "Recently, the Shanghai property market has been the absolute focus of attention. On April 18, the luxury residential project 'Riviera Triumph' in Lujiazui officially opened for sale, with all 212 unit" type: "topic" locale: "en" url: "https://longbridge.com/en/topics/20613041.md" published_at: "2024-04-19T11:06:00.000Z" author: "[睿思中国](https://longbridge.com/en/profiles/12624762)" --- # Observation on Shanghai luxury housing market: Short-term supply surge, mid-to-long term direction remains unclear The recent Shanghai property market has become the absolute focus of attention. On April 18, the luxury property "Riviera" in Lujiazui officially launched, with all 212 units sold out on the same day, generating a total revenue of 7.027 billion yuan. Among them, the "most expensive unit" priced at 110 million yuan was snapped up immediately. Recently, an old villa in Shanghai's Jing'an district was also sold for 310 million yuan, with a unit price of approximately 1.009 million yuan per square meter, setting a new record for transaction prices in Shanghai and mainland China. Earlier, on March 28, the luxury project "Zhonghai Shunchang Jiuli" by China Overseas Land launched, achieving sales of 19.653 billion yuan in a single day, setting a national record for the highest sales volume in a single property launch. This has once again demonstrated the fervent enthusiasm in the property market. Thanks to the transactions of high-end projects, Shanghai's property market continues to lead the nation. According to the latest data from the National Bureau of Statistics, Shanghai's new home price index rose by 0.5% month-on-month in March 2024, still leading the nation, and increased by 4.3% year-on-year, ranking second nationwide. Market statistics show that Shanghai's new home price index has risen for 22 consecutive months month-on-month and 65 months year-on-year. Currently, the upward trend in Shanghai's property market is expected to continue for some time. Analysts point out that **the concentrated supply of high-end residential projects will be the "main theme" of Shanghai's new home market this year.** It is reported that in the first four batches of new homes this year, the total supply of high-end properties priced above 20 million yuan has already reached nearly 80% of last year's total. Notable projects include Wufang Garden in Huangpu District, Manyun Shanghai in Yangpu District, and Ruifeng Ningyuan and Ruisheng Ningyuan in Xuhui District. In April alone, at least four projects with an average price exceeding 160,000 yuan per square meter were launched in Shanghai, including Poly Shibo Tianyue, Sunac Waitan Yihaoyuan, CapitaLand Maoming Mansion, and Hongkong Land Qiyuan in Xuhui Riverside, totaling 650 units. This has undoubtedly added fuel to the already booming high-end property market. In fact, the entry barriers for these properties are not low. Taking Riviera as an example, with an average price of 172,800 yuan per square meter, individual buyers must pay at least 3.3 million yuan as a deposit, while corporate buyers need to pay 11.55 million yuan. Additionally, applicants must score at least 113 points and have 21 consecutive years of social security contributions. Nevertheless, there are still many qualified buyers. During the subscription period for Riviera, a total of 1,043 groups registered, with a subscription rate exceeding 500% and deposits totaling 3.5 billion yuan, setting a new record for new home subscriptions this year and even surpassing the land acquisition cost of 3.185 billion yuan. On April 14, Hongkong Land Qiyuan in Xuhui Riverside began subscriptions, with an average price of 178,000 yuan per square meter, the highest in this batch. Its 80 units achieved a 135% subscription rate within just two days. Meanwhile, Sunac Waitan Yihaoyuan Phase II, despite concerns over Sunac's debt issues, recorded a 174% subscription rate and is set to launch on April 21. Of course, these subscription rates are not particularly high given the current market frenzy. However, analysts note that due to the strong demand for high-end properties in Shanghai, projects like Hongkong Land Qiyuan and Sunac Waitan Yihaoyuan are expected to perform well in final transactions. Market analysis suggests that **the price gap between new and secondary homes is one of the main reasons for the "hot sales" of high-end properties.** For instance, the secondary market prices for Riviera Phases I and II are around 200,000 yuan per square meter, significantly higher than the launch price of 170,000 yuan per square meter. Similarly, Sunac Waitan Yihaoyuan Phase I's secondary market price remains at 200,000 yuan per square meter, while Phase II's launch price is 168,000 yuan per square meter. Market observers point out that while transaction volumes have improved due to increased supply, the absolute volume is only at a moderate level, indicating a slow recovery in the new home market. Moreover, while the high-end market thrives, suburban properties in Shanghai still face significant inventory pressure, with some even resorting to discounts. Further analysis indicates that **with increasing supply, the performance of high-end property sales will become a major test for Shanghai's property market.** As prices rationalize and arbitrage opportunities diminish, investment demand will wane, leading to a divergence in the popularity of high-end projects. **Sustaining demand is a critical issue that the property market must address.** According to the latest data from the People's Bank of China, China's broad money supply (M2) exceeded 300 trillion yuan at the end of March. The rapid growth of M2 reflects the country's economic vitality and the vast potential purchasing power in the market. Additionally, to promote stable and healthy development of the property market, both central and local governments have introduced supportive policies on both supply and demand sides this year. Recently, over 30 cities have announced support for "trade-in" policies for secondary homes, with more than 10 cities already implementing such measures. These policies aim to revitalize the secondary home market and boost new home transactions through acquisitions, exchanges, and subsidies. Other supportive measures include relaxed mortgage policies, home purchase subsidies, eased purchase restrictions, and temporary removal of the lower limit on mortgage rates for first-time buyers. Cities have also established "white lists" of eligible real estate projects to facilitate financing for developers. **The fierce competition in Shanghai's luxury property auction market further proves the presence of affluent buyers:** A villa in Shanghai's Changning Xia Du Garden sold for 128 million yuan, with a unit price of 213,400 yuan per square meter; a 433.87-square-meter unit in Tomson Riviera sold for approximately 118 million yuan, or 273,000 yuan per square meter; and a property in Pudong's Jiujiantang sold for 144 million yuan, 60% above the starting price, at 211,400 yuan per square meter. Analysts note that real estate inherently carries investment attributes, leading to a "buy high, sell low" mentality. Many buyers in Shanghai's luxury market anticipate continued price increases. "If high-end properties fail to offer reasonable growth expectations, demand could shrink significantly, which contradicts China's broader real estate development goals," one analyst said. "Clearly, after policy adjustments, China's property market has shifted from the Hong Kong model to the Singapore model, emphasizing affordable housing and talent housing. The proportion of ordinary homes in the market has decreased, with limited price growth. In Singapore, for example, luxury property prices have remained stable for years," the analyst added. ### Related Stocks - [002739.CN - WANDA FILM](https://longbridge.com/en/quote/002739.CN.md) - [00169.HK - WANDA HOTEL DEV](https://longbridge.com/en/quote/00169.HK.md) - [300168.CN - Wonders Information](https://longbridge.com/en/quote/300168.CN.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.