Young homebuyers in Shanghai are choosing subdivided flats in European heritage houses in the city’s former international settlement districts over newer developments, according to market observers.

Sales of heritage houses, including those of entire 200 square metre to 300 square metre villas and subdivided small homes in such houses, is still a niche market, making up about 5 per cent of total transactions in the city. What has changed is tastes among local buyers, especially those born after the 1990s.

“It is a changing mindset. The older generation, who used to live in dilapidated homes, is shunning old homes and is chasing modern big ones. But the younger generation, with a background in art or architecture, favours such legacy homes,” said William He of Merry Home, a property agent dealing in old European style villas as well as subdivided homes in these houses.

About 150 subdivided units measuring between 20 square metres and 50 square metres are changing hands every month in the former French Concession, as well as other former international settlement districts, He said.

The prices of such units range from 100,000 yuan (US$14,215) per square metre to 150,000 yuan per square metre. The average price for new homes in the city is about 50,000 yuan per square metre.

Fion Sun, 31, has just started decorating her new home, a 30-square metre flat in a three-storey Spanish villa on Shaanxi Nan Lu in the former French Concession. The exhibition curator and her husband bought the flat a month ago for 3.6 million yuan, or 120,000 yuan per square metre. The villa is more than 100 years old.

“It is expensive on square metre basis, but the total amount is still a bit lower than that for a new private home, which are usually bigger than 80 square metres. With our budget of about 3 million yuan, the new homes we could afford would be one-and-a-half hour’s ride away from downtown, without any public transport links,” Sun said.

Sun and her husband chose location over size. “We would like to start our life together in a place with stories instead of those cookie-cutter units, which are away from our social circle,” she said.

Earlier, such flats were bought by investors because of their design as well as ease of renting to expats, said Michael Ding, an agent with 52laofangzi, which has been focusing on such homes for 19 years now.

“Since the end of last year, more young people are choosing to buy these homes for their own use. One of the major advantages is the location. All heritage houses are in the very heart of Shanghai, and there is basically no way of finding new homes with such a good location, except for ultra expensive properties that average individuals might not be able to afford,” Ding said.