China’s luxury housing market is booming

The Chinese can’t get enough penthouse luxury. They’re pausing overseas, as the government clamps down on capital flight, and are busy gobbling up luxury high rise apartment buildings in Beijing.

So much so, in fact, that the price for luxury towers in the city just hit a record high of more than 70,000 yuan per square meter, or roughly $10,500 per square meter. (One square meter is equal to nearly 11 square feet.)

China’s luxury housing market is booming. Mainland developers are bidding to dollar for land in tier one cities like Shanghai because they know they can find the buyers. Many of them already have two or three properties, according to property services firm Tospur in Shanghai.

But over the last decade, real estate has become the one store of value that wealthy Chinese can count on. The government has been unable to curtail this trend, even as it touted the stock market, new IPOs, and backstopped falling equity prices in order to convince investors that the central bank had their backs.

The Chinese aren’t buying it. They’re buying fancy digs in the city instead.

In Shanghai, there were 682 transactions for new apartments priced over 100,000 yuan ($15,000) per square meter in the first half, surpassing 2015 sales figures, Tospur data shows.

“There is strong demand for luxury housing,” Huang Yu, executive vice president of the China Index Academy, a property research institute, told the South China Morning Post in Hong Kong on Thursday. The paper highlighted the fact that “hot money” was pouring into mainland Chinese properties. “Wealthier buyers are considering properties as safe investments, in anticipation of the yuan’s further devaluation,” Yu said.

This week, PNC Financial in Pittsburgh forecast the yuan to weaken to 7 to 1 by next year. It is currently trading at 6.68 to the dollar.

Analysts expect the future average selling price for luxury real estate in Shanghai to be at least 120,000 yuan, or around $18,000 per square meter.