The Chinese megacity of Shenzhen just saw its largest home sale deposit with nearly $2 billion locked up from more than 2,700 interested buyers. The frenzied buying is for the city's luxurious Sky Park project built by state-owned developer Shenzhen Investment Holdings.
According to an announcement released by Shenzhen Investment Holdings on Sunday, the company had received deposits from 2,794 individuals who had signed up for their property lottery for the Sky Park project. Each participant deposited 5 million yuan to be included in the lottery and only a handful will be selected at random to purchase the limited slots available on the development.
For the first batch of the sale, only 192 units will be made available. This means that only one out of 15 depositors will be able to acquire the property. The luxurious flats range from 133 to 398 square meters, priced at 131,000 yuan per square meter. The cheapest flat available costs 15 million yuan, or around $2.12 million.
The amount that was deposited in the property lottery is the biggest the city has ever seen. The record amount of deposits has been seen by some as a clear indication of the robust demand for high-end luxury housing in Shenzhen. Other megacities, such as Shanghai and Beijing, have recently seen a decline in the market, partly due to the recently imposed strict price curbs.
Since China had unveiled plans to implement a wide array of reforms aimed at transforming Shenzhen into a high-tech capital, the city has seen a big boom in property transactions. Shenzhen is also particularly attractive to investors given its central role in the further development of the Greater Bay Area. The initiative aims to bolster the integration of the economies of megacities such as Hong Kong, Macau, and nine other cities in the southern province of Guangdong.
Most investors are now scrambling to acquire a Shenzhen address, but those who can afford it are eyeing more luxurious projects in prime locations. Shenzhen Investment Holdings' Sky Park project, located in the Xiangmihu district, is one of the most sought after properties in the city.
According to the developer some buyers had even tried to bribe agents to ensure that they have a place in the lottery to buy flats. The bribes, or "tea charges," reportedly even reached as high as 2 million yuan.
Newly developed properties have become particularly attractive given that they are often priced below the prices of second-hand flats in the same areas. The government has so far been trying to pressure developers to cap their prices to below-market rates to make sure that more people can afford them. Without any government restrictions, the prices of the new properties could skyrocket given the very high demand.
