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Political upheaval has little impact on Chongqing's property market
By Valerie Tan | Posted: 30 April 2012 1739 hrs

CHONGQING: China's fastest growing city Chongqing invested heavily in housing under its former party chief Bo Xilai.

Authorities are now investigating billions of dollars of government spending under his administration, and the city's new leaders have also launched a 'clean-up' of government investment projects.

But commercial developers say this will have little impact on the city's booming property market.

In the last five years, the southwestern metropolis of China saw countless new homes constructed as part of a massive urbanization plan to move five million villagers into the city.

Property prices have tripled since 2008.

Gu Qingpin, director at River International, said: " Right now, the highest price is over 8,000 yuan per square metre for a good apartment in the main city area. But since last year's property regulation, we've seen average price falling to about 6,300 yuan, which is a rational stabilization."

Chongqing is the only other Chinese city besides Shanghai to introduce a property tax last year as part of efforts to cool down the housing market.

Developers say high interest rates may have kept out speculators from inflating prices.

But with no restrictions on buyers from outside the city and no limit on the number of units one can buy, developers say Chongqing's housing market has huge potential for growth, especially in the luxury homes sector.

Mr Gu said: " We've also seen a small number of individuals with huge accumulation of wealth in the high-income sector. They have great purchasing power. They buy several units of villas or high-end properties. Property prices in Chongqing are depressed. It's unlikely to have a bubble after proper government measures."

And Singapore-owned developer CDL China is confident of demand for its upcoming high-end project in central Chongqing.

When completed in 2013, it's expected to be priced at up to US$4,800 per square metre, which is still relatively cheaper than similar homes in China's first tier cities.

Daniel Liao, vice president of CDL China, said: " There are not many ways to invest in China so people tend to buy houses. China is developing so quickly that even with limits placed on buying properties, the growth in new population will outnumber homebuyers. Chongqing has seven million residents now, and in another three to five years time, three to four million more residents are expected to move into the city. That will strongly sustain property development."

The developer is already looking for another piece of land to acquire in Chongqing.

" We've thought of other areas in Chongqing because the city has developed so fast in the past two years and it plans to have 10 million residents living in an urbanized city of 10 million square kilometres in the coming three to five years so there are opportunities in the new districts," said Mr Liao.

- CNA/fa