Luxury mansion foreclosure sales plummet, new homes are being grilled on the rack

Market transparency is a double-edged sword for many real estate companies—it’s both an opportunity and a challenge.

If you acquire land in a prime location, you might find yourself stuck between a rock and a hard place.

A Testing Ground for New Developments

As March arrives, new housing projects in Shenzhen are accelerating.

Typical projects are being approved for pre-sale across various districts.

Recently, Lianfa Hongshan Xinzhuya Residence in Longhua Hongshan has entered the final sprint.

According to market sources, the marketing center and showrooms are expected to open in late March, with certificates issued and listings available by the end of March.

This project was won last year through 65 rounds of bidding by Lianfa, at a price of 1.212 billion yuan, with a premium of 46.6%.

Covering about 10,000 square meters, with a planned construction area of approximately 43,000 square meters, and a gross floor area of about 34,000 square meters, the plot ratio is 3.09, with a greenery rate of 32.49%. It includes roughly 27,000 square meters of residential space, about 500 square meters of commercial podium, and around 100 square meters of property management rooms.

The design features rooftop gardens with three main buildings plus supporting podiums.

One building has two units per floor, 25 stories high, about 80 meters tall, with two elevators serving six units per floor; another building has three units per floor, 16 stories high, about 53 meters tall, with a total of 332 residential units and 360 parking spaces.

Due to the relatively low plot ratio of about 3.09, and being a new development in an area with low plot ratio, built under Shenzhen’s new construction regulations, it is defined as the first project in Hongshan and surrounding areas to comply with the new regulations 2.0.

Therefore, this project will also be a typical example in Longhua, in the popular Hongshan area, following the launch of Hongshan Huafu in April 2025.

Hongshan Huafu is a relatively small project, covering about 5,000 square meters with a building area of approximately 35,900 square meters, and a high plot ratio of 5.17. It consists of only one regular residential building for sale, and another for resettlement housing, with nearly half the units being resettlement apartments. Parking ratio is less than 1:1. It was once called a “mosquito-sized” project by industry insiders.

It offers 184 refined apartments ranging from 62 to 78 square meters, with an average transaction price of about 80,500 yuan per square meter, totaling roughly 4.89 to 6.52 million yuan, achieving sunlight within hours and becoming Shenzhen’s second “sunlight project” that year.

The market has even labeled it as “the last residential land in Hongshan, once gone, there’s no more.”

But now, the upcoming launch of Lianfa Hongshan Xinzhuya Residence has broken this consensus.

Both projects are located in Hongshan, with similar product positioning.

Lianfa Hongshan Xinzhuya Residence and Hongshan Huafu represent starkly different product segments: larger scale, lower plot ratio, more modern unit layouts, better planning and amenities, pure commercial housing, and branding as “a pioneer of Shenzhen’s new regulations” and “a good home for the new youth.”

Even though the project is small, the market will see Lianfa Hongshan Xinzhuya Residence as a symbol of the new wave replacing old projects in Longhua, naturally using its sales and market performance as a benchmark.

Pricing is Key

However, even with market transparency and high expectations, the project faces several challenges.

First, its own positioning.

The site is triangular, surrounded by roads and residential houses.

To adapt to the shape, the buildings are arranged in a linear fashion, with some units having limited sunlight and views due to close proximity—closest distance between buildings and surrounding houses is only 16.63 meters.

For example, Building 1, units 1-2, is about 25 stories and 80 meters tall, with only about 18.51 meters to the nearest neighboring units; below the 10th floor, windows may face balconies of nearby houses, reducing privacy.

The community is small, covering just 10,900 square meters, with three residential buildings tightly packed without ground-level gardens.

Although there are plans for 360 parking spaces—roughly 1.08 spaces per unit, including 8 accessible spots and 108 charging stations—the unit layouts are somewhat limited. Lianfa offers 69㎡ three-bedroom and 99㎡ four-bedroom units, filling a long-standing gap for small, pure residential units in Hongshan, but the smallest units have relatively compact bedrooms and living spaces.

Second, the land cost is evident.

Calculations show that the market advantage of Lianfa Hongshan Xinzhuya Residence is moderate.

The land parcel A817-0619 in Hongshan, acquired at a premium of 46.6%, cost 1.212 billion yuan, with a floor price of 44,500 yuan/㎡, setting a regional record.

Including construction, taxes, financing, and operational costs, break-even prices are estimated at over 65,000 yuan/㎡, and to achieve higher profits, sales prices would need to reach over 70,000 yuan/㎡.

Third, market transaction prices are also in view.

Looking at nearby new developments:

• In December 2024, Shenye Yiyuefu (Phase 3) sold 246 units of 99–168㎡ refined apartments at an average of about 72,100 yuan/㎡, totaling roughly 6.36 to 13.17 million yuan.

• In June 2024, Phase 2 of Shenye Yiyuefu sold 252 units of similar size at an average of about 69,100 yuan/㎡, totaling roughly 6.12 to 12.93 million yuan.

• In June 2023, Phase 1 sold 358 units of 78–179㎡ simple apartments at an average of about 71,900 yuan/㎡, with remaining unsold units as of March 17 still totaling 139.

• In January 2021, Shangyu Hongshanli, with 152 units of 54–99㎡ unfinished apartments, sold at an average of about 73,900 yuan/㎡, totaling roughly 4.76 to 7.65 million yuan.

If Lianfa Hongshan Xinzhuya Residence opens at over 70,000 yuan/㎡, it will be difficult for the market to absorb.

In March last year, a 90.82㎡ unit in Shangyu Hongshanli sold for 530,000 yuan listed, with a final transaction of 519,000 yuan—about 57,100 yuan/㎡.

In early 2012, Geidi Shangtangdao’s 65㎡ two-bedroom sold for around 3.07–3.10 million yuan, roughly 47,300–47,700 yuan/㎡; in October 2022, an 89㎡ three-bedroom sold for about 4.4 million yuan, roughly 49,100 yuan/㎡.

In 2016, Xinghe Chuanqi’s 4-bedroom units of 89.05㎡ sold for 5.68 million yuan in January, at about 63,785 yuan/㎡; listed at 6.25 million, with a 210-day transaction cycle. Similarly, a 86.79㎡ four-bedroom sold for 5.68 million yuan in January, at about 65,446 yuan/㎡, listed at 6 million, with a 152-day cycle.

Another example, Zhongyang Yuanzhu from 2012, 88.05㎡ three-bedroom, sold in January for about 6.29 million yuan, roughly 71,414 yuan/㎡; listed at 6.6 million, with a 55-day cycle. A 143.34㎡ four-bedroom sold in December for about 9.44 million yuan, roughly 65,844 yuan/㎡, listed at 10 million, with a 255-day cycle.

If Lianfa’s new project sells at over 70,000 yuan/㎡, it will be pricier than second-hand deals in Geidi Shangtangdao and Xinghe Chuanqi.

Compared to these mature communities with good views, proximity to metro, stable property management, and larger spaces, the triangular plot, adjacent farmland, only 16 meters between buildings, and noise from Min Tang Road pose significant drawbacks.

At the same price point, how will the market choose?

The Bottom Line for New Housing Expectations

But what’s more concerning is the recent appearance of high-quality foreclosure properties in prime districts.

Currently, market pressure isn’t mainly from competing new projects lowering prices, but from the foreclosure prices of some top-tier communities, which are pulling down market expectations.

For example, in Xiangmi Lake, a traditional luxury area in Futian, the property “Xiangyu Central” has an listed average price of over 200,000 yuan/㎡. In December, a 160.42㎡ unit sold for 26.95 million yuan, about 168,000 yuan/㎡.

Recently, on Alibaba’s auction platform, a 203.62㎡ unit started at about 15 million yuan, with a final bid of roughly 9.54 million yuan, translating to about 75,000 yuan/㎡—even below the appraisal value of approximately 18.8 million yuan, which equates to about 92,300 yuan/㎡. This set a new foreclosure record for the community, even lower than the original purchase price.

In February 2024, a unit of about 133㎡ in the same building was auctioned at around 150,000 yuan/㎡.

In August 2023, a 203㎡ unit sold for 51.8 million yuan, with a price of about 255,200 yuan/㎡, setting a new high for the community.

Over two or three years, market prices have dropped by more than half.

Not only Xiangmi Lake, but also top communities in Bao’an and Nanshan are seeing foreclosure price adjustments:

• In Nanshan’s OCT area, a 144.61㎡ unit was auctioned on March 16 with starting bid of about 7.6 million yuan, appraisal at about 9.5 million yuan, final price about 9.54 million yuan, roughly 65,992 yuan/㎡.

• In Bao’an’s Zhong’an New Coast, a 334.34㎡ large flat was auctioned on March 16, starting at about 17.54 million yuan, appraisal at about 21.92 million yuan, with an actual transaction at about 52,450 yuan/㎡—only 80% of the appraisal.

• Also in Bao’an, a 353.91㎡ unit in Xinjin An Yi Hao is about to be auctioned, starting at roughly 24.36 million yuan, with an appraisal of about 30.44 million yuan, roughly 86,024 yuan/㎡.

This indicates that in core districts like Futian, Nanshan, and Bao’an, foreclosure prices for high-quality homes are generally between 70,000 and 90,000 yuan/㎡.

For the market, the message to buyers is clear:

Xiangmi Lake and OCT are already at 70,000–90,000 yuan/㎡. Why should Longhua Hongshan sell for only 65,000–70,000 yuan/㎡? If Hongshan Xinzhuya Residence truly sells for over 70,000 yuan/㎡, why buy here?

Selling cheaply risks losses; cash flow can’t sustain it. Lacking cost-effectiveness, the market won’t support it.

Therefore, the pricing of Lianfa Hongshan Xinzhuya Residence is crucial.

If it’s priced directly at over 70,000 yuan/㎡, it might fall into a very awkward market zone.

Moreover, the market’s expectations for quality upon delivery are now higher and more stringent than before.

Backed by Lianfa Group, the company’s brand reputation was decent in the past, but in recent years, doubts have arisen.

For example, Hefei Lianfa Binyu Tinghu, a flagship high-end improvement project, faced issues during its 2024 handover, with 95 problems found—hollow sounds, leaks, ceiling cracks.

In Shenzhen, the Lianfa Zhenzhuya Residence in Longhua, delivered early this January, was criticized by third-party inspectors for bathroom water damage, lack of backflow preventers on range hoods, skewed entrance doors, and loose wall tiles.

Last March, the Guangming Lianfa Yueshang Residence was about to be handed over but faced owner complaints about discrepancies.

More concerning is that Lianfa Group’s parent company’s earnings forecast shows an expected first loss in 2025, with a maximum of 10 billion yuan, mainly due to being dragged down by Lianfa.

Lianfa has been posting losses for three consecutive years, with tight cash flow—no longer the stable player it once was.

In this context, if Lianfa can deliver high-quality materials and strict construction standards for Xinzhuya Residence without cutting corners, it will require some risk-taking from cash-rich buyers.