Contrary to the expectations of some industry analysts, rents and sale prices for high-end apartments in Shanghai are not immune to a global financial crunch as they fell rather sharply last month, according to latest data by Centaline China, one of the city's property agencies.

The agency's latest statistics showed that rents for such properties in prime locations dropped significantly by as much as 30 percent to 40 percent during last month. Just a few months ago the analysts believed that luxury properties may remain unscathed from the financial turmoil or be least affected due to their limited supply and robust demand.

"Amid a worsening global economic condition, high-income earners have lowered their expectations of future salary rises and many have shifted to mid-class properties to save living costs," said Ma Ji, head of the research and consultancy department at Centaline. "Besides, an aggravating cut in headcount around the world has also dampened the local expat demand for high-end apartments."

According to Centaline, landlords started to offer rent cuts of between 30 percent and 40 percent last month in traditional prime areas, including Xintiandi in Luwan District and Zhenning Road and Gubei area in Changning District.

For instance, monthly rent for a 140-square-meter, two-bedroom apartment on Zhenning Road, which used to be more than 20,000 yuan (US$2,920) before October, has now fallen to between 15,000 yuan and 18,000 yuan.

Gubei, which is one of the most popular expat haunts in the city, was one of the hardest hit areas in terms of sales over the past month.

The asking sale prices of high-end apartments there, which has seen many South Koreans leaving due to exacerbating economic conditions in their home country, fell on average 10 percent to 15 percent in late last month. There have been few inquiries for one development in the area even though landlords have slashed their asking prices to between 30,000 yuan a square meter and 32,000 yuan a square meter from this year's peak of 38,000 yuan to 40,000 yuan, according to Centaline.

Meanwhile, Xue Jianxiong, an analyst with E-House (China) Holdings Ltd, the largest integrated real estate service provider in China, said data tracked by the E-House/CRIC system has found that top-end apartments in Shanghai are now only able to fetch a price slightly higher than 55,000 yuan a square meter, against about 85,000 yuan per square meter seen before June.

(Shanghai Daily December 11, 2008)