A villa project in Sheshan, in suburban Shanghai, is being offered at a 45 percent discount. The average price of 15 million yuan per unit in August 2011 dropped to 9 million yuan by June 2012, according to the property information platform of the Internet portal.
Developers and home-owners often offer lower price than the quotes released on websites if buyers can pay in cash, said Zhang Xueyi, an agent in Jing'an district.
It is a tough time for high-end residential properties in Shanghai amid strengthened policy control, according to Jenny Wu.
It is quite difficult for high-end properties to sell like hot cakes, she added.
In the past high-end apartment developers were reluctant to offer discounts. Doing so was regarded as a betrayal of the high-class image they are supposed to convey but, under the pressure of policy controls, several developers have started doing so to get more sales, said Wu.
According to Anjuke, an online property trading platform, the average price of Shimao Sheshan villas dropped to 42,722 yuan a square meter in July, a 23.86 percent month-on-month decrease.
Zhang Yulin, an analyst with Xinyuan Property Agency, said Shanghai's realty market is driving to two extremes. In downtown areas within the second ring road potential buyers focus on luxury homes while strong demand is found in suburban areas and in the outskirts of Shanghai.
Two factors have led to the current situation in the market for luxury homes, said Zhang.
First, the macroeconomic situation in the past two quarters did not encourage people who could afford a luxury home priced at more than 10 million yuan to buy one because many rich people were tightening their belts during the economic downturn, said Zhang.
Another reason is that supply is higher than demand so buyers are waiting for lower prices in a market with strengthened policy controls, Zhang said.
Some agents said they are getting more confident despite the gloomy market because they are seeing an increase in sales against the general situation of the market.
Zhang Nan, an agent with Zeal Reality, a luxury home agency in Xuhui district, said sales are rising smoothly.
"The current situation is quite similar to what it was at the end of 2008," said Zhang.
Take Lakeville Regency for example, Zhang said. Zeal Reality sold only three units in 2011. However, they had sold five suites by the end of June. Zhang is also dealing with some potential buyers who are bargaining for lower prices.
Unlike most luxury homes which are experiencing falling prices, some projects in prestigious locations are reporting increases in price.
The average price of Fortune Residence, on the east bank of Huangpu River, climbed from 89,301 yuan a square meter in February to 93,578 yuan a square meter in July.
One potential buyer of Shimao Riviera Garden, who declined to be named, said he has been following prices of riverside apartments for half a year and now believes it is a good time to buy.
"Average prices are climbing back to a higher point but some developers and first-hand apartment owners who want to sell are still offering discounts. If I wait for another half year, I may miss the window," he said.
Many buyers purchased apartments as an investment rather than to live in, which shows that investors and even speculators are coming back to the Shanghai realty market, said Xue Jianxiong, an analyst with China Real Estate Information Corp, a realty information provider.
During the past 18 months, price controls affected the realty market, suppressing purchasing ability and slowing the pace of development. As a result, there may be a shortage of supply in the future, which will push up prices, said Xue.
Without further controls in addition to the tough ones imposed in January 2012, it is very likely realty markets will revert to a situation in which both prices and trade volumes will surge, Xue said.
(China Daily 08/27/2012 page15)
