Buyers from Hong Kong and Taiwan are showing an increasing interest in investing in Shanghai's luxury residential properties.
The enthusiasm has been driven by the mainland's booming economy and a continuously appreciating yuan, industry experts said yesterday.
"It is rather safe to make an investment in primarily located luxury apartments in Shanghai where the economy is booming," said Cai Weiming, a real estate expert from Taiwan.
"In addition, a stronger yuan also helps guarantee the profitability of those property deals."
Statistics show that 32 units in City Castle, a high-end residential development in downtown Jing'an District, have been bought by people from Hong Kong and Taiwan in the first half of this year, accounting for about 60 percent of the total sales for the block in that period.
Meanwhile, in the Lakeville Regency, a luxury residential project near Xintiandi in Luwan District developed by Shui On Land, 46 deals have been secured by buyers from Hong Kong and Taiwan in the first six months of this year, accounting for almost 40 percent of transactions reached during that period.
"Citywide, about 50 percent of luxury apartments with an average price of more than 30,000 yuan (US$3,896) per square meter have been sold to buyers from Hong Kong and Taiwan between December and June," said Xue Jianxiong, head of research at the Shanghai Youwin Real Estate Information Service Co Ltd.
People buy such expensive apartments mainly for investment, he said. "A constantly gaining yuan has played a very significant role in these property investment activities."
Xue said there has been a key recent change in investment strategy. People from Hong Kong and Taiwan once bought residential properties in Shanghai mainly for their own use, he said.
Now, however, most deals are for investment purposes - and buyers are prepared to outlay huge amounts of money.
A recent report released by Jones Lang LaSalle said that sales of luxury and high-end residential properties rebounded in the second quarter of this year.
Sales at some high-end properties were recorded as three times more than the previous quarter and more than double among luxury properties, indicating an increasingly active investment sentiment.
With limited new supplies on the way, luxury prices on the secondary market will probably experience more upward pressure.
Colliers International, another global property consultancy, also found that the city's luxury residential market remained active in the first half of this year, with a high level of end-user demand which resulted in increased transactions.