THE strongest weekly home sales in 19 months and revived optimism among property developers signal that Shanghai's real estate market may be on the mend after the bubble burst in 2008, industry analysts said.

In the week ended May 10, 512,600 square meters of new homes, excluding those built for people displaced by urban redevelopment projects, were sold in the city, the highest weekly volume since October 2007, according to E-House (China) Holdings Ltd.

"I believed that the worst might have passed and the market is picking up strength again," said Xue Jian°?xiong, an analyst with E-House, one of the country's largest integrated real estate service providers.

"Of course, it might fluctuate a bit in the coming months due to seasonal factors," he added, "but robust sentiment among home buyers could mean that we have seen the bottom."

The boom in sales followed two recent real estate fairs held in the city. Organizers said the feedback they received from those who attended was very positive.

Visitors to the larger fair, which featured 200 exhibitors at the Shanghai Exhibition Center, more than doubled to 170,000 people from a year earlier, and transactions valued at about 1.92 billion yuan (US$281 million) were signed during the four-day event. That was more than three times the deals concluded at the same event a year earlier.

A smaller fair, held in the eastern area of Pudong, drew 60 exhibitors and 48,000 visitors.

Industry analysts said the market started perking up as early as February, just after the week-long Spring Festival, a traditionally slack season for home sales.

According to Shanghai Uwin Real Estate Information Services Co Ltd, sales of new homes in April totaled 1.89 million square meters, up from 1.5 million square meters in March, 787,600 square meters in February and 480,000 square meters in January.

"Transaction volume of new homes has been maintaining a two-digit growth rate in the past three months, and the April figure surpassed the monthly average of 1.73 million square meters recorded during the overheated market period of 2007," said Lu Qilin, deputy head of research at Uwin.

"Market fever could possibly return if the volume continues to soar," he said.

Price reductions in residential developments, mainly mid- to low-end apartments, helped shore up sales. New measures introduced late last year by both the local and central governments, including cuts in taxes and fees, and more favorable loan terms, contributed to a revival of interest in the market - more from homebuyers than investors.

Existing homes

Aside from a spurt in new home sales, the existing home market is also showing signs of renewed life.

According to Century 21 China Real Estate, about 28,600 existing homes changed hands in the city in April, the highest monthly figure since 2006. That compares with about 25,700 units in March and 15,000 units in February.

Wang Jianjun and Yang Peizhi, a couple in their late 50s, were among the local buyers who contributed to rebounding statistics.

The couple used to live in a 60-square-meter apartment on the 5th floor of an old building in Pudong. In February, they moved to a 77-square-meter space they purchased in the northern district of Yangpu, ideally located 2 kilometers from their daughter and newly born grandson.

"It's much more convenient for us to go to our daughter's home now and take care of our grandson, since both our daughter and her husband are very busy," Wang said. "We are getting old and we really need an elevator, which our old place didn't have."

Wang and his wife found the market favorable for their move. They paid about 1.3 million yuan (US$190,500) for their newer apartment in Yangpu where apartments of similar size in the same development once required as much as 1.4 million yuan during the heyday.

Whether it's to upgrade their housing or start out fresh as newlyweds, individual homebuyers have been the dominant force in the market in recent months, analysts said.

The rebounding market is also enlivening sales at the top end of the market, they said, which indicates the recovery might gain momentum.

High-end sales

About 672 new apartments costing 30,000 yuan a square meter or more were sold in the city in April, a month-on-month increase of 44 percent, according to E-House statistics.

Meanwhile, the volume of existing apartments priced between 30,000 yuan and 40,000 yuan a square meter also jumped in March, according to Shanghai Centaline Property Consultants Ltd, which operates the city's largest realty chain.

"We saw quite a few transactions priced at more than 5 million yuan each in April, particularly in prime locations such as Xintiandi and Biyun," said Ma Ji, head of research at Centaline. "We expect the trend to continue through May."

Rising home sales have been accompanied by a more upbeat attitude among property developers, many of whom view the current environment as a ripe time to buy land.

One of the latest examples was Gemdale Corp, a company based in the southern city of Shenzhen, which successfully beat nine foreign and domestic competitors in bidding for a development site in Shanghai's western district of Qingpu.

"We think it is a good time to purchase land now because the market has become more rational than it was during the bubble of 2007," said Zhao Hanzhong, vice president of Gemdale and chairman and general manager of its Shanghai operation.

"We feel very optimistic about the housing market in Shanghai as well as the whole Yangtze River Delta region and will certainly increase our portfolio in the region over the coming years," he said.

Gemdale paid 560 million yuan for the 83,645-square-meter site, which translates to about 5,500 yuan a square meter. That compares with a price of more than 7,000 yuan per square meter during the overheated market in December 2007.

Shanghai's property market suffered major setbacks in 2008 when the bubble burst, with many available development sites going begging. Many of the country's developers, pinched by sluggish sales and a lack of cash, chose not to participate in land auctions.

"It's a promising sign that a rare parcel of land in the downtown Changning District is coming up for auction," said Ma. "That could be a move by the local government to further boost the local housing market."

During the first quarter, the Shanghai Urban Planning, Land and Resources Administration Bureau announced 97 land parcels will go to auction, 35 percent of them designated for residential development. That's a higher proportion dedicated to homes than in the same period a year earlier, industry people said.