A growing generation of luxury homebuyers in Shanghai are shopping for compact condos to curb escalating prices.
Two months ago, the average price of flats in Shanghai had tapped 50,000 yuan ($7,278) per square meter, according to China Daily. The paper also noted that trending prices for an approximately 968-square-foot unit in Shanghai had scored 25 times more than the average family was earning.
Chinese developers followed the Hong Kong trend.
Two years ago, Charles Chan of property advisory firm, Savills, told Property Report:
“Theoretically, tiny flats can achieve higher prices per square foot because of the smaller lump-sum amount [required to buy them].” He added, “From the developers’ point of view, strong demand for these flats will also reduce their investment risk, so why not build more small flats?”
One development agency that concurred was Sun Hung Kai Properties, which built its luxury 3,400-unit housing project in Sham Shui Po, with condos that featured 160 square feet of usable living space, excluding the kitchen and the bathroom.
Back in Shanghai, new rules that strive to calm Shanghai’s overheated market by calling for second-home buyers to pay 50 percent to 70 percent upfront payments influence investors to eye “compact luxury.” These homes represent, according to the state-run China Overseas Land and Investment Ltd., figments of luxury properties that used to sprawl approximately 2,691 square feet to 4,306 square feet but have since shrunk to little more than half that size.
While some luxury buyers still prefer bigger units to maximize their investment, a growing number of young professionals welcome their modern “dig” in the city. These small and comfy condos could be a long-term trend, as China continues to inflate its city and housing prices.
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