Summary of Key Points
In the past, Chinese developers favored the construction of large luxury residential complexes (such as Cuihu Tiandi in Shanghai and Luhu Ecological City in Chengdu), which often consisted of thousands of units across several thousand acres. Nowadays, in core cities like Beijing, Shanghai, Hangzhou, and Nanjing, smaller complexes with fewer than 100 units per complex have become popular. These complexes offer larger apartment sizes and more luxurious amenities. This shift is driven by three major factors: the diminishing availability and increasing premium of land, developers' strategies aimed at reducing risks through quicker project turnover, and the preferences of high-net-worth individuals who value privacy and exclusivity. As a result, the concept of luxury housing has evolved from mass production to that of limited-edition luxury goods.
1. Luxury Apartments with Fewer Units but Better Amenities
Unlike large complexes that relied on scale to reduce costs, smaller luxury apartments now feature fewer units (48, 83, or 168) but larger living spaces (for example, the main apartment types at Wangtianji in Hangzhou range from 296 to 506 square meters, with some even reaching over 700 square meters). The amenities offered are also significantly more luxurious than those found in ordinary residential areas. For instance, Wangtianji boasts indoor and outdoor swimming pools, a gym, yoga rooms, a cigar bar, a private banquet hall, an indoor basketball court, and a golf simulation area. At VILLA Men Dongyuan Di in Nanjing, each of the 48 units comes with its own private courtyard, as well as a private banquet hall and social space for residents. Such amenities were previously only available in much larger complexes; now, they are also provided in smaller complexes.
2. The Land Market Is Changing
The size of land plots sold in core cities is decreasing, yet demand remains high:
- The Hongkou Linping Road plot in Shanghai (7,115 square meters or about 10.7 acres) was contested by 12 real estate companies for 63 rounds, with a 36% premium, and will ultimately accommodate only 80 to 100 units.
- The Xuanwu G16 plot in Nanjing (9,917 square meters or about 15 acres) saw a 50% premium, setting a five-year record for land sales. With a low density of construction, it is expected to produce fewer than 100 units.
- The Puhuangyu plot in Fengtai District, Beijing (only 16,800 square meters, located just 700 meters from the Temple of Heaven), will also have fewer than 90 to 100 residential units available for sale.
These once insignificant plots are now highly sought after due to their prime locations and well-developed infrastructure, making them easy to sell.
3. Why Do Developers Prefer Smaller Complexes?
Developers no longer favor large complexes for several reasons:
- Lower financial pressure: The cost of acquiring smaller plots is much lower (around 200 to 300 million yuan), compared to the billions required for larger projects.
- Faster capital turnover: Smaller complexes can be sold out in two sales rounds, allowing for quicker project completion and reduced risk.
- Reduced risks: In a tough market, large land holdings can become a burden (especially after 2022). Smaller complexes are less susceptible to financial losses.
- Policy support: Urban land supply policies are shifting towards more frequent, smaller-scale developments to stabilize the market.
4. The Needs of High-Net-Worth Buyers
Buyers of luxury homes worth tens of millions or even hundreds of millions no longer simply seek good locations; they prioritize:
- Privacy: Small communities with fewer residents and less noise.
- Exclusivity: Neighbors who are in similar social circles (such as entrepreneurs or celebrities) for easier resource sharing.
- Scarcity: With a limited number of high-end buyers in any city, large-scale releases can drive down prices. Smaller complexes help maintain stable property values.
Developers even use market research to determine the number of potential buyers for luxury homes (e.g., those capable of affording 50 million yuan) before controlling the supply, much like luxury goods manufacturers that limit production.
5. A Major Shift in the Logic of Luxury Housing
Luxury housing has shifted from being a mass-produced commodity to a limited-edition luxury good. Developers no longer aim to build as many units as possible but focus on making each project more exclusive. This change reflects the increasing scarcity of land in core cities and the desire of high-net-worth individuals for uniqueness. True luxury is no longer about having what everyone else has; it’s about being part of a select group.
In Conclusion
The transition from large complexes to smaller luxury apartments represents a shift from competition based on scale to one focused on quality, location, exclusivity, and scarcity. In the future, top-tier luxury housing may increasingly resemble private clubs within cities, rather than ordinary residential areas.