As the optimists see it, there's no tomorrow.

Residence Huashan, a 52-unit luxury apartment project near the Hilton Shanghai in downtown Jing'an District, recently advertised units at prices averaging 90,000 yuan a square meter, one of the most expensive on the west side of the river.

The developer, Shanghai Ding Gu Real Estate Development Co Ltd, said market feedback has been robust, with a few units already booked.

A similar story is occurring in the villa market.

Sales of villas, which include stand-alone units, semi-detached houses and townhouses, have been on the rise for six consecutive months.

A total of 1,699 villas, covering a combined 427,000 square meters, were sold across the city in July, an increase of 113 units, or 37,000 square meters, compared with June, according to the country's leading real estate services provider, E-House (China) Holdings Ltd.

The real estate boom is beginning to entice more than just home buyers and traditional developers.

Last week, Red Dragonfly Group, a leading Chinese shoe maker based in Wenzhou in Zhejiang Province, announced it would soon launch Peninsula Villa, a high-end development in Shanghai's Pudong New Area, its first foray into the city's real estate market.

Stand-alone villas in the development will have a plot ratio of only 0.19, the lowest in Pudong, covering a land area of as large as 2,000 square meters each, compared with the 700 square meters usually found in Pudong.

Most industry analysts are predicting that luxury houses will continue to outperform the mass market because many people view property as a hedge against inflation.

"Wealthy people will always turn to purchasing houses of supreme quality and location to fight inflation," said Fu Qi, a senior analyst with E-House (China) Holdings Ltd. "We believe the strong momentum in the high end of the market is sustainable."

A total of 219,000 square meters of new luxury homes, priced above 40,000 yuan per square meter, were sold in Shanghai in the first seven months of this year, an increase of 45 percent from same period a year earlier.

Purchases of high-end houses in June and July accounted for about 3 percent of all home sales, up from 1.2 percent at the beginning of this year, according to E-House research.

"Star River, which won accolades for its earlier luxury projects in Beijing and Guangzhou, is impressing Shanghai now with its super success," said Jennifer Jiang. "Let's wait and see how long such a crazy boom can last."

(Shanghai Daily August 30, 2009)