Editor's note: China's Bubble is a four-part multimedia series on an emerging threat to China's booming economy — a residential real estate bubble, particularly in the business and finance hub of Shanghai. The series also looks at the underlying causes of the bubble, and examines how one unique social custom is driving prices even higher.

SHANGHAI, China — In a former Naval airfield reincarnated as one of the city’s hottest new residential zones, one set of high-rises is aptly named “Shanghai Dream.”

Lodged in a once-forgotten corner of Shanghai’s downtown the area of Xin Jiangwan Cheng, or New River Bay Town, is only half-built. But the development is already home to some of the fastest-rising property prices in the city.

Its wide open spaces — the result of decades spent in military isolation from commercial development — has been marketed as an untouched wetland habitat rarely seen in Shanghai. The military port has today been turned into a dream marina for wealthy yacht owners who launch cruises down the Huangpu River.

Tishman Speyer Properties of New York and Hines Interests of Texas, two of the largest landlords in America, have staked billion-dollar claims here. So have state-owned China Construction, Singapore-listed Chinese developer Yanlord Land and more than 50 others.

Developers rave about Jiangwan’s status as a diamond in the rough. The 2-square-kilometer area is hemmed in by drab boulevards of rundown Communist-era housing blocks that have long been considered an economic backwater.

Yet all the amenities that China’s newly moneyed class demand — proximity to the city's center, access to good schools and hospitals and a seemingly infinite supply of shopping malls — are all nearby.

(Watch how one Chinese social custom is driving Shanghai prices even higher.)

On Jiangwan Road, new residents walk dogs on sidewalks hedged with bamboo, passing young men playing a passionate pick-up game of basketball.

Even Li Ka-shing, the richest man in Hong Kong, owns a villa here.

“Jiangwan is to become the neighborhood of choice for the affluent of northeast Shanghai,” effused a development manager at China Construction, which bought a 114,517-square-meter plot of land for RMB3.7 trillion ($547 million) in December.

Three beltways — the Inner, Middle and Outer Ring Roads — serve as natural dividers for the real estate market in Shanghai. Inside the Inner Ring is considered city center, and its average price is RMB34,638 ($5,094) per square meter.

But prices for yet-to-be-built flats in Jiangwan, just outside the Middle Ring Road, hover around RMB38,000 ($16,840) per square meter, triple the average price a year ago. That's the equivalent of $1 million for a 2,000-square-foot condo. That is, if you're lucky enough to score one. Demand far outstrips the intermittent supply of new chunks of flats released to the market.

“It is extremely rare to get such a big piece of land in downtown,” explains the manager at China Construction. “And since supply and demand determines price, the government cannot possibly control where prices are headed.”

Of the options currently available, the cheapest include three-year-old, two-bedroom apartments in “Shanghai Dream,” one of the earliest developments completed in Jiangwan. Those start from RMB28,000 ($4,120) per square meter. Prices are expected to jump when the area’s subway station finishes construction in May.

On the high end of the spectrum, a group of 15 villas has just become available after they were used to film a television series.

The asking price: RMB15 million ($2.2 million).

At prices like that even real estate agents are growing nervous. “Don’t go asking around about those villas," one warned. "The owner might start hiking up the price."

Paul Schittek contributed to this article.

Read the complete "China's Bubble" series:

China's Bubble: Is real estate about to pop?

China's Bubble: Must have house to marry

China's Bubble Video: StreetLife Shanghai

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