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

Ask AI · How can Lianfa Xinzhuya Residence break the high-cost pricing dilemma?

Author | Drunken Shark

Source | Gelonghui Real Estate

Market transparency is a double-edged sword for many real estate companies: it can be a gift or a hurdle.

If you acquire a prime location, you might find yourself in a difficult position.

New Home Testing Ground

As March begins, new homes in Shenzhen are accelerating.

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

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

According to market sources, the marketing center and showrooms are expected to open in late March, with certification and market entry by the end of March.

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

It covers 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, with a plot ratio of 3.09 and a greenery rate of 32.49%. It includes about 27,000 square meters of residential units, roughly 500 square meters of commercial space in the podium, and about 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 project’s low plot ratio of only about 3.09, and being a new development in a low-density area, built according to Shenzhen’s new construction regulations, it is defined as the first new regulation 2.0 project in Hongshan and surrounding areas.

Therefore, this project will also be a typical project in Longhua’s popular Hongshan area, following the Hongshan Huafu project launched in April 2025.

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

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

The market even defined it as “the last residential land in Hongshan, once it’s gone, it’s gone.”

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

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

Lianfa Hongshan Xinzhuya Residence and Hongshan Huafu form a stark product contrast: larger scale, lower plot ratio, more modern unit layouts, better planning and amenities, purely commercial housing, and branding as “a pioneer of Shenzhen’s new regulations” and “a good home for young people who understand new lifestyles.”

Even though the project is small, the market will see Lianfa Hongshan Xinzhuya Residence as a symbol of the transition between old and new “good homes” in Longhua, naturally using its sales and market performance as a testing ground.

Pricing is Key

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

First is its own positioning.

Product-wise, the site is a triangular plot surrounded by roads and residential houses.

To adapt to the shape, the buildings are arranged in a linear fashion, with some units’ sunlight and views blocked by nearby structures. The 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 two elevators serving six units per floor; Building 1, unit 3, is 16 stories and about 53 meters tall, with a total of 332 units and 360 parking spaces.

Because of the low plot ratio and being a new development on a triangular site adjacent to farmland, with the closest building spacing only about 16 meters, and facing noisy Tongtang Road, privacy and quietness are concerns.

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

Although there are 360 parking spaces planned (parking ratio about 1:1.08 for 332 units), including 8 accessible parking spots and 108 charging stations.

Unit layouts are somewhat limited: Lianfa offers 69㎡ three-bedroom units and 99㎡ four-bedroom units, filling a long-standing gap in small-unit supply in Hongshan, but the smallest units have relatively cramped bedrooms and spaces.

Second is the cost of land.

Calculations show that the market’s winning odds for Lianfa Hongshan Xinzhuya Residence are moderate.

First, 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.

Adding construction, taxes, financing, and operational costs, the break-even price is estimated at over 65,000 yuan/㎡, and to achieve more profit, sales prices need to reach over 70,000 yuan/㎡.

Second, market transaction prices are also a reference.

For example, nearby new homes’ opening prices:

• Shenye Yiyu Fu (Phase 3), December 2024: 246 units, 99–168㎡ refined homes, average price about 72,100 yuan/㎡, total price about 6.36–13.17 million yuan.

• Shenye Yiyu Fu (Phase 2), June 2024: 252 units, similar size, average price about 69,100 yuan/㎡, total about 6.12–12.93 million yuan.

• Shenye Yiyu Fu (Phase 1), June 2023: 358 units, 78–179㎡, average price about 71,900 yuan/㎡, total about 5.33–14.84 million yuan, with 139 units remaining unsold as of March 17.

• Shangyu Hongshanli, launched in January 2021: 152 units, 54–99㎡, average price about 73,900 yuan/㎡, total about 4.76–7.65 million yuan. If Lianfa Hongshan Xinzhuya opens at over 70,000 yuan/㎡, the market may struggle to accept.

In March last year, a 90.82㎡ unit in Shangyu Hongshanli was listed at 5.3 million yuan, sold for 5.19 million yuan, about 57,100 yuan/㎡.

Other comparable projects:

• Geindiy Shangtang Road, 65㎡ two-bedroom, sold in Jan-Feb 2024 for about 3.07–3.10 million yuan, roughly 47,300–47,700 yuan/㎡.

• Xinghe Chuanqi, 89.05㎡ four-bedroom, sold in January 2024 for 5.68 million yuan, about 63,785 yuan/㎡; listed at 6.25 million yuan, with a 210-day transaction cycle.

• Zhongyang Yuanzhu, 88.05㎡ three-bedroom, sold in January 2024 for about 6.29 million yuan, roughly 71,414 yuan/㎡; listed at 6.6 million yuan, cycle 55 days.

If Lianfa Xinzhuya Residence sells at over 70,000 yuan/㎡, it will be more expensive than second-hand sales of Geindiy Shangtang Road and Xinghe Chuanqi.

Compared to these mature communities near metro stations with open views and stable property management, the triangular site facing farmland, with the closest building only 16 meters apart and noisy surroundings, makes market acceptance uncertain at similar prices.

Market Expectations for New Homes

More importantly, recent high-quality auctioned homes in core districts are influencing market expectations.

The pressure isn’t from competing new projects lowering prices but from the auction prices of prime residential communities in core areas, which are pulling down market price expectations.

For example, in Xiangmi Lake, a traditional luxury area in Futian:

• Xiangyu Central, listed at over 200,000 yuan/㎡, in December last year, 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 about 15.04 million yuan, averaging only 75,000 yuan/㎡, even below the assessed value of about 18.8 million yuan (~92,300 yuan/㎡). This set a new auction low for the community, even lower than the original purchase price.

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

In August 2023, a 203㎡ unit sold for 51.8 million yuan, with a record high of 255,200 yuan/㎡.

Over two to three years, market prices have adjusted downward significantly.

This isn’t limited to Xiangmi Lake; similar trends are seen in Bao’an and Nanshan’s high-end communities:

• In Nanshan’s OCT area, a 144.61㎡ unit auctioned on March 16, starting at about 7.6 million yuan, with an assessed value of about 9.5 million yuan, finally sold at about 9.54 million yuan, averaging roughly 65,992 yuan/㎡.

• In Bao’an’s Zhong’an New Coast, a 334.34㎡ unit auctioned on March 16 started at about 17.54 million yuan, with an assessed value of about 21.92 million yuan, but the final transaction was about 52,450 yuan/㎡, only 80% of the assessed value.

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

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

For the market, this sends a clear message:

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

Selling cheaply risks losses and cash flow issues; lacking cost-effectiveness, the market won’t support higher prices.

Therefore, the pricing of Lianfa Xinzhuya Residence is crucial.

If it directly references the 70,000+ yuan/㎡ level, it might get stuck in a very awkward market zone.

Furthermore, the market’s quality expectations for 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, in Hefei, Lianfa Binyu Tinghu, a flagship high-end improvement project, faced issues during its 2024 handover, with 95 problems found—hollowing, leaks, ceiling cracks.

In Shenzhen, Lianfa Zhenzhu Yaju in Longhua, delivered early this January, was found by third-party inspectors to have bathroom water damage, exhaust fans without backflow preventers, skewed entrance doors, and loose wall tiles.

Last March, the Guangming Lianfa Yueshangju project was about to be handed over but faced owner complaints about quality.

More concerning, the parent company’s earnings forecast shows a projected loss of up to 10 billion yuan in 2025, mainly due to being dragged down by Lianfa.

Lianfa has been posting losses for three consecutive years, with tight cash flow, indicating it’s no longer the stable player of the past.

In this context, if expectations are that Lianfa will use quality materials and strict construction standards for Xinzhuya, it requires a bit of risk-taking from cash-preserving buyers.