Real estate sales in China up, prices soar

On Monday, for instance, a land parcel along Beijing's Guangqu Road was auctioned off for more than 4 billion yuan (US$585 million) after fierce bidding among major developers from the mainland and Hong Kong.

The price set a record for a single land parcel in Beijing.

More dramatically, just 15 months ago, this land parcel was withdrawn from a public tender due to a lack of bidders.

“The bidders have gone irrational. A bubble in Beijing's property market is definitely there,” said Pan Shiyi, chairman of property giant SOHO China, who was also a bidder that day, after the latest auction.

This “bubble” is being felt in the real estate market in major cities across the country.

In Beijing's Central Business District, residential property appreciated 6.5 percent in the past week alone, according to leading property broker Homelink.

In some established neighborhoods, such as the R&F City, SOHO New Town and the Pingod, demand for second-hand apartments is four times the units available.

“We used to talk about monthly price growth, but recently, it's more about daily change,” a broker with Homelink said.

In Shanghai, developers of the luxury Tomson Rivers apartments, known for their price of more than 100,000 yuan per sq m (US$14,000), sold 10 units in the first 25 days of June.

Before that, only four had been sold since the project was marketed in 2005.

In Guangzhou, the downtown housing price reached 11,200 yuan per sq m (US$1,600) in May, close to the historical high of 11,574 yuan per sq m (US$1,700) in October 2007, official statistics indicate.

And the average price of second-hand apartments reached an all-time high of 9,648 yuan per sq m (US$1,400) in the same month.

“One thing we are concerned about is whether there is a new bubble being shaped. While people have a strong perception of excessive liquidity and further price growth, the possibility of a bubble is pretty big,” said Gu Yunchang, secretary-general of the China Real Estate Association.

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