Enthusiasm for real estate in Shanghai’s Free Trade Zone may be cooling off as a recent report shows sales in the special economic zone to have fallen sharply since the first of the year.
After the new zone was announced in August last year, real estate speculators drove up land and housing prices in the eastern part of Shanghai’s Pudong district, where the zone is located, in anticipation of an economic boom.
According to a report in the China Daily,
Statistics provided by the market research department of Century 21 China Real Estate in Shanghai show that only 8,000 square meters of new buildings sold in the Lingang area from January to Feb 12 this year, down 5.8% year-on-year. Only 10,000 sq m sold in Waigaoqiao from the beginning of the year, down 38.1% year-on-year, an even sharper decline than the average 36.1% decrease in Shanghai during the same period.
Lingang area is performing a little better as the land is still hotly pursued and the operation of Metro Line 16 facilitates transportation.
Luo Yinshen, assistant manager of the market research department of Century 21 Shanghai, said the areas that benefited from the FTZ have overdrawn those benefits while basic living facilities and industrial structures are still awaiting substantial improvement.
While transaction volumes have fallen off, some analyst attribute the drop to a seasonal lull associated with the Chinese New Year holiday in the first week of February this year.
During January of this year, China’s central government approved the creation of 12 more free trade zones, which would compete with Shanghai’s entry. The zone in Shenzhen has already attracted a US$2.2 billion investment involving US real estate developer Silverstein Properties.