Monday, March 18, 2013

Property investors cashing in on Qianhai  |  13 March 2013 1548 hrs

QIANHAI: Property investors in China are eager to get a piece of Qianhai in Shenzhen which is touted to be a real estate gold-mine.

Despite the fact that the special economic zone is nowhere near completion, residential prices in the nearby projects are already commanding prices nearly twice the city's average.

Qianhai, a 15-square kilometre plot of land might be a golden opportunity for investors.

In many ways, Qianhai resembles the Shenzhen of three decades ago, which was then, also slated as a pioneer for economic reform in China.

If the authorities get it right, the US$45 billion project, focusing on the financial and services sector, will generate US$24 billion a year.

It will be home to some 800,000 foreign talents from around the world and that is why investors have already been busy snapping up residential projects in Nanshan and Baoan districts, just outside Qianhai.

Andy Lee Yiu-Chi, head of Centaline Property Agency's Shenzhen branch, said: "In 1999, the property price was 3,000 yuan per square metre before the Binhai main road was opened. After it started to be used, prices shot up 10 times to 30,000 yuan per square metre."

Some callED it the Xi Jinping effect after the Chinese leader showed top-level support for the Qianhai project when he visited the area back in December.

Overnight, home prices in the surrounding areas shot up and some owners even held back their units in anticipation of further growth in property prices.

Properties within Qianhai itself have yet to be built. Most of the land belongs to the government and about 28 per cent are owned by listed companies - China Merchant Holdings, China International Marine Containers and Shenzhen International.

"There are still many rumours about the owners and rights on the development. Hong Kong property developers also intend to invest there, but still nothing is confirmed yet," said Mr Lee.

But property analyst Adrian Ngan, who has paid a site visit to Qianhai with Hong Kong developers, is unconvinced.

"For major Hong Kong developers, they want to adopt a more cautious attitude, meaning they will follow the development. If there are more signs of success, big success, they will try to get a slice of that," said Mr Ngan, executive director at CITIC Securities.

He added: "Maybe they also don't like the model. The government has many times reiterated that this is not going to be a property project so for Hong Kong developers, maybe it is not their cup of tea."

And while it is too early to tell whether home prices in Qianhai will hit bubble territory, Mr Ngan believes prices are already beginning to look a little frothy.

"I wouldn't say it is too late but now, a lot of optimism has been factored into prices. To me, that is not the best time to buy. If you look at long-term, the project is successful, that prices could increase more. At this level, most of the upside has already been factored," he said.

However, other property analysts are more bullish, and reckon that average home prices in Qianhai could rise to as much 100,000 yuan per square metre over the next five years - three times the current levels.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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