Shenzen has overtaken Beijing and Shanghai, China's two largest cities, as the most expensive real estate in the country, according to data released by Chinese real estate Internet portal SouFun

Located just north of Hong Kong, Shenzen is known as the Silicon Valley of China with a large number of technology companies based in the city, such as Chinese Internet giant Tencent and drone manufacturer Dajiang Innovation.

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Several banks and financial institutions based overseas have also opened up offices in Qianhai, a special commercial development zone located in the western part of the city where eligible companies are subject to a 15% preferential corporate income tax rate.

And like Silicon Valley in California, the real estate market in Shenzen has gone through the roof.

According to SouFun, Shenzen's average home price skyrocketed nearly 40% in 2015, pushing it past China's two largest cities - Beijing and Shanghai - and making the city's real estate more than twice as expensive as the national average. Shanghai is now the second-most expensive real estate market in China, and Beijing has moved to third.

The growth of the market can also be attributed to China's central government easing housing regulations, and cutting interest rates six times in 2015 to boost the housing industry. Chinese real estate prices comprise approximately 15% of the country's GDP.

For the month of December, new home prices in China increased in December for the fifth consecutive month. The average price of a new home in China's 100 major cities grew 0.74% from November to December to 10,980 yuan ($1,686) per square meter, according to the China Index Academy. Meanwhile, the average price rose 4.15% for the year.

At a policy conference in December, China said it would encourage property developers to "moderately cut housing prices" and ordered local authorities to "revoke obsolete restrictive measures." 

TagsShenzen Passes Beijing Shanghai as Most Expensive Real Estate in China, SouFun, Chinese Real Estate Market, real estate