THE Palais de Fortune is unique. Where else do 172 small French-style mock chateaux stand on a plot a mere 81 acres in size? The Palais de Fortune will remain unique, for China is to enforce a ban on such villa developments.

The measure is one of several unveiled this week in a campaign by the Government to cool a property market that has reached boiling point. In April property prices in 70 cities rose by an average of 5.4 per cent. In some cities the increase was more than 10 per cent.

The market in such cities as Beijing and Shanghai is red hot. Shanghai prices have risen about 300 per cent in three years and this has China’s leaders worried. The Communist Party is anxious that middle and lower-income families will find themselves priced out of the market. Leaders also worry that the surge in prices will become a bubble, then millions in the new middle class could lose their savings if prices crash.

The construction of luxury villas on the outskirts of cities is the most disturbing phenomenon of all. Farmers are losing their land, often without compensation, as developers use their connections to appropriate building plots. China’s leaders have not forgotten that they were swept to power in 1949 on a groundswell of support from poor peasants.

Prices of the beige concrete villas modelled on 19th-century French chateaux at Palais de Fortune average £1.4 million for a 1,500sq m (16,150sq ft)shell. The buyer pays for all interior walls, bathroom, kitchen and decoration. The developers have helped out with the design — setting aside space for a pool in the basement, a three-car garage and bathrooms.

Pan Xiaofu, sales manager at what is the most luxurious gated villa complex in the capital, said: “This policy change on villas is good for business. The more rare the property, the higher the price.”

At the other end of the scale is 45-year-old Zhang Huiyun, who works for a Beijing cleaning company and has just spent her savings of £21,000, plus a loan of £7,000, from relatives to buy an 80 sq metre flat in Beijing. She is thrilled that she bought just before the new rules because now she is certain that prices will rise further.

Ma Rui, manager of an agency that specialises in second-hand property — the least popular in a market where new homes are prized — was unconcerned that fewer flats might come on to the market after the new measures. “This will be a blow, but very temporary.”

The aim of the rules is to help buyers like Mrs Zhang, who can afford only property of less than 90sq m. The rules include raising the minimum down-payment ratio to 30 per cent from 20 per cent and levying a 5 per cent tax on the total sales value of property sold within five years of purchase. Last year measures set the tax after two years.

In a country where the stock market has been falling for years, and where the currency cannot be converted, people have few choices to invest their savings. Property tops the list and the latest measures are unlikely to cool their ardour.

One young magazine editor already owns a property in the provinces and a small 80sq m home in Beijing. He said: “I will definitely buy something bigger. After all, Chinese care about face and the size of your house gives you a lot of face.”

Buyers at Palais de Fortune can expect lots of face for their millions. And no one else will be building similar villas if the Government has its way.

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