The China Real Estate Index, based on 17 major cities, showed Beijing, Shanghai, Tianjin and Xi'an registered the biggest growth rates.

Higher demand and prosperity remained the major reasons for the remarkable growth, said Ye Jianping, dean of the Soufun.com Academy, one of the index makers.

The index, in existence for the past six years, is made by measuring property prices, sales volume and consumer confidence and is considered an authoritative indicator of the performance of the Chinese real estate market. Prices are its main reference factor.

It is estimated that in the first quarter, a total of 300 million square metres of commercial housing was being built nationwide, 21.2 percent more than the same period last year, Ye said.

The area of finished space reached 14.79 million square meters, a rise of 13.1 percent from the same period of last year.

Space sold surpassed 17 million square meters during the period, a rise of 24.2 percent.

Supply volumes rose faster than demand, bringing developers under pressure, Ye said.

He also pointed out that prices for commercial housing in China were higher than in the rest of the world, and construction costs have been rising in recent years.

By the end of 2000, there was more than 91 million square meters of unoccupied housing.

"All those factors make it unlikely that housing prices will rise significantly, although increasing demand has pushed prices up in certain cities,'' Ye said.

He concluded that in the long term, there remains the possibility of price increases.

Beijing's market is expected to expand rapidly, Grade A office buildings and luxury housings being the focus of business and Zhongguancun, China's Silicon Valley, getting a lot of attention.

In Shanghai, a more mature market, the index shows a booming picture both for real estate developers and buyers. The index shows a 0.7 percent monthly increase rate in the city for March, a high not recorded since November 1998, when the city's property market began to recover from the Asian financial crisis.

(China Daily 04/17/2001)