Young Chinese professionals in their 30s have displaced middle-aged Chinese buyers, who gained their wealth from manufacturing, to become the top buyers of Beijing’s new luxury property developments.
The easing of property policy controls, along with easier access to credit and Beijing’s hot real estate market, has led to a property-development frenzy within Beijing’s third ring road, reports South China Morning Post.
However, Beijing’s municipal government has released less land for development this year, which means high-end property prices in the city are skyrocketing. During the first four months of this year, Beijing auctioned off only seven sites for development, compared to 10 over the same period last year.
The most recent land auction in Beijing saw state-owned Beijing Capital Land pay 5.64 billion yuan (US$871 million) after 140 rounds of bidding for a site in the Zhongguancun region in the Haidian District, which is near universities and tech companies. Based on the sale price, analysts calculated that residential properties built on the site would have to sell for more than 100,000 yuan (US$16,121) per square meter.
“Developers are putting more investment in first-tier cities, where demand is strong, rather than third or fourth-tier cities, where the market is sluggish because of a serious oversupply,” said Guo Yi of Yahao Real Estate Selling & Consulting Solution Agency. “That’s why it’s hard to win land auctions and land prices have been pushed up.”
During the first three weeks of April, 420 luxury residences were sold at a price of more than 60,000 yuan per square meter, an 83-percent increase in units sold over the same period the previous year.
Compared to last year, the aggregated area of the residences has almost doubled to 123,000 square meters, and average price has increased 30 percent to 93,000 yuan per square meter.
With over 1,000 luxury apartments for sale in Beijing, developers are going to great lengths to woo these young buyers, many of whom work in finance, investment, and internet companies.
Ma Yan, marketing director of Palais De Violette, has modernized the apartments’ interiors and installed modern, hi-tech appliances. During the second half of 2014, half the homes sold in Palais De Violette were bought by buyers born after 1980.
Liu Qiang, a marketing manager at developer Maoyuan Property, took a similar approach, offering tailor-made residences to his clients.