More villas will enter the property market in the year's second half, given regulators' decision to allow sales of more developments, but overall supplies for this year will be down from 2003, indicates a report on the industry.

The increase in supplies will stimulate demand and villa sales will boom, Beijing-based Soufun.com Academy predicted in a report it released last week.

Soufun.com is China's largest real estate portal. Soufun.com Academy is the portal's research department.

By the end of June, there were 176 villa projects -- with a combined 19 million square meters in construction area -- in Beijing. A combined 40,000 villas have been constructed in those developments, and 20,000 were being planned.

The villas being planned are expected to enter the market within five years.

Zhao Liyi, an expert with Soufun.com Academy, said: "The supply will be greatly reduced, as the Ministry of Land and Resources' circular in early 2003 called for the nationwide end to the ratification of villa projects."

In China, villas include detached, single-family villas, also called independent villas, and town houses.

In the year's first half, 12 villa projects were launched -- with a combined 510,000 square meters of construction area -- in Beijing. The projects include 550 independent villas and 1,200 town houses.

Many developers, in the year's first half, delayed launching their villa projects to wait for a more positive market.

The new villa projects in Beijing are located primarily in Changping, Daxing and Chaoyang districts, which are closer to the city's downtown.

In the year's first half, 2,100 villas, which included town houses, were sold in Beijing. The units had a combined 540,000 square meters of living space.

The average price for a villa in Beijing during the year's first half was 9,732 yuan (US$1,175) per square meter. That was slightly higher than last year's average price.

The report does not reveal last year's average price.

Compared with the same period of last year, the average price for an independent villa fell, while the average price for a town house rose.

In terms of products, Beijing's villa market has become specialized. Single-family, detached villa projects accounted for 74.4 percent of the new villa developments in Beijing in the year's first half. That was up 16 percent year-on-year.

Meanwhile, the percentage of projects that combined independent villas and townhouses fell from 41.9 percent to 25.7 percent.

"That figure indicates villa developers have been focusing more on single-family units, in an effort to position their products," Zhao said.

In the year's first half, mid-range single-family, detached villas, with 300-500 square meters of living space, accounted for 71.2 percent of the villa projects.

Last year, such villas accounted for 58.6 percent of developments.

Soufu.com Academy's report indicates the numbers of large independent villas -- with more than 500 square meters of living space -- or smaller, economical villas -- with less than 300 square meters of living space -- have been reduced.

Newly launched town houses had between 190-330 square meters of living space. Last year, the town houses were between 150 and 300 square meters.

"While there are fewer large independent villas available in the market, the average price of town houses continues to rise," Zhao said.

The increased demand for mid-range villas, which sell for 1-3 million yuan, indicates a growing number of middle-class people -- including foreign firms' senior managers, computer engineers, designers and artists -- are choosing to buy villas in Beijing, Zhao said.

Compared with last year, the density of villas in a given development has decreased. The average plot ratios for Beijing's villa projects in the year's first half were 0.55, 0.05 down from last year's 0.6. The ratios for town house plots were reduced from 0.88 last year to 0.67 in the first half of this year.

The lower densities indicate the quality of villas is improving in Beijing -- in terms of environment and designs.

In the year's first half, most new villas were built with nature as a backdrop, and "back to nature" as the theme. Most of the new villas are based on European style.

In the year's second half, despite the booming sales of villas, townhouse projects will sell better than independent villas, as many townhouse developments are located on the outskirts of the city.

(Business Weekly September 1, 2004)