Caixin Weekly | Sky Gardens Stir up Real Estate Market: How to Resolve the Four-Generation Home Siphon Effect? (AI Translation)

财新周刊｜“空中花园”搅动房地产市场 四代宅虹吸效应何解？

[para. 1] The China Merchants Lin Yu Jing project in the Nansha District of Guangzhou, heralded as "Guangzhou's Premier Next-Gen Residence," successfully sold its initial units upon opening in December 2024, thanks to significant demand. By January 2025, it topped sales charts for Guangzhou, demonstrating the strong market attraction for fourth-generation housing, as confirmed by the China Index Academy.

[para. 2] Fourth-generation housing faces rising demand in various cities, with fast sales recorded across projects in Chongqing and Xi'an. These homes, conceptualized by Italian designers and introduced to China by Tsinghua University in 2019, emphasize shared living spaces with nature. The phenomenon is supported by a growing number of related projects with expansions seen in places like Jiaxing, Jiangmen, and Wuhan.

[para. 4] The China Association for Engineering Construction Standardization classified fourth-generation residences in 2021 into three types: sky courtyard, shared garden units, and aerial parking. Each unit in China Merchants' Forest Residency, for example, features expansive sky gardens, blurring lines between indoor and outdoor living spaces.

[para. 6] A 2025 CRIC report indicates that over 70 projects have planned such developments nationwide, with Nanjing and Xi’an leading in project numbers. Fourth-generation housing is becoming a considerable factor in market supply.

[para. 12] However, concerns about such housing creating a "siphon effect" in the market, drawing away interest from other housing types, exist. Despite robust market trends indicating a preference for "good houses," older generation homes may lose appeal, leading to price dips in second-hand markets.

[para. 15] Guangzhou's government initially supported these innovative housing models but quickly tightened regulations due to concerns over market impacts. By December 2024, policies were revised to restrict the oversupply of land plots exceeding new regulations, emphasizing the limitation on developers gifting unregistered sky gardens. Reports say about 806 units of special homes remain.

[para. 19] The government's efforts are in part a response to fiscal pressures since land sale revenue supports local budgets, and a cooling property market has exacerbated these challenges. Real estate professionals suspect rapid policy shifts may curb second-hand housing prices further, impacting market dynamics.

[para. 21] Key policy relaxation regarding floor area ratios in cities like Chongqing, Suzhou, and Quanzhou in 2023 revitalized interest in these projects. In Guangzhou, adjustments allowed residential building open spaces to have larger balconies up to 30% of the net floor area.

[para. 37] However, as many cities adapted policies to allow plan modifications in existing projects, challenges persist. The Ministry of Natural Resources and the National Development and Reform Commission encouraged proactive space optimizations, reflecting a broader shift to improve residential offerings.

[para. 44] An insider remarked that, despite current policy support, clear guidelines on plan modifications and land transfer revaluation are necessary for smoother transitions into the fourth-generation residential property era. The wider implementation of these homes may significantly alter market landscapes, reshaping buyer priorities and influencing long-term industry trends.