Chinese buyers are buying luxury homes as ‘hard currency’ in a weak real estate market

Chinese buyers are buying luxury homes as ‘hard currency’ in a weak real estate market

BEIJING (Reuters) – Luxury real estate in the southern Chinese city of Shenzhen, where the property sector has slowed, is bucking the downside, as wealthy buyers look for a safe haven amid a weak market, the official Securities Times reported on Monday.

In the southern tech hub, a total of 604 units in a luxury project yet to be built were sold for up to 162,000 yuan ($23,087) per square metre.

With a unit size of 425 square metres, this suggests that some of them could be as high as $9.8 million.

In May, units in a project costing at least 18 million yuan were sold on the first day of its launch, the newspaper said.

China’s real estate market has slowed sharply in recent months, with prices and sales plummeting after authorities intervened to cut excessive debt held by property developers, leading to a liquidity crunch and hurting buyers’ sentiment.

The newspaper quoted industry insiders as saying that new luxury homes remain popular with buyers who see it as “hard currency” in a weak real estate market.

Demand remained bleak despite a series of stimulus measures imposed by more than 200 cities to pique buyers’ interest, with property sales by floor area down 48% year-on-year in August.

In contrast, in the first half of this year, the average selling price of luxury properties of 10 million yuan and above rose 11% over the previous year, according to China Real Estate Information Corp (CRIC), an independent real estate advisory service.

(dollar = 7.0176 renminbi)

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