(Yicai) June 18 -- Even though the Chinese real estate market has not yet recovered, luxury homes and villas in core urban areas are still the most sought-after properties by wealthy buyers during auctions.

A property in the Guangdong Zunfu high-end project in Guangzhou's core business district was auctioned for more than CNY40.3 million (USD5.6 million) after 59 rounds of bidding on June 12, a premium rate of over 175 percent. A contender once raised the bid by CNY10 million (USD1.4 million) in one go.

A villa in the China-Association of Southeast Asian Nations Business Center in the Nanning Area of the China Guangxi Pilot Free Trade Zone in Nanning attracted 42 bidders in an auction on June 9. The property was sold after 241 bidding rounds for CNY6.8 million (USD947,635), up 58 percent from the CNY4.3 million starting price.

"The villa is surrounded by rich educational, green, and commercial resources and is well-decorated, so it had drawn a lot of attention," a real estate agent in charge of the property's community told Yicai. The community has a limited number of top-end villas and several low- and high-rise residences.

"Demand for high-end real estate always exists," Zhang Xiaofei, a senior analyst at the China Index Academy, told Yicai. "High-income people need to improve their living conditions, and enterprises have real estate investment demand, which drives the transaction of high-value assets."

Foreclosure cases of expensive premium residences sold in the first five months of the year were concentrated in core areas of first-tier cities where luxury homes are scarce, such as historic villas in Shanghai and top-end properties in Shenzhen, Zhang said. These properties are contested by rich buyers for their irreplaceable locations, resulting in very high premiums.

The number of foreclosure properties in Shanghai is far greater than that in other cities, with the highest transaction price for a property sold at a judicial auction also in Shanghai, Zhang noted. The transaction prices of foreclosure homes in various cities are directly related to factors such as their economic development and real estate market valuation.

As real estate policies begin to emphasize meeting ‘diversified needs,’ villa-like properties are returning as popular products in the high-end market. The few high-end homes available in the foreclosure market are expected to continue taking center stage.

Editors: Tang Shihua, Futura Costaglione