Shanghai Real Estate

Is disaster looming? Or will Shanghai defy all naysayers after the expo?

Dear Shanghai and of course, everybody else reading this out there….

…. happy chinese new year!

I’ve had a break, for the first time in years, and really was able to put some thought into the madness of this Real Estate market we all love.

First, upfront, I’m speculating based on my experience and “insight” into the inner workings of this market.
It’s not a numbers game, it’s as I always say here, plain common sense to me.

And this post is a question asked to the future, not a prediction.

So, now, to get at it.
Recently our real estate firm got a lot of new customers that came directly related to the expo, several countries are sending in people just for the expo, and companies do so though.
That for us amounted to about an extra 30 or so clients that are directly involved in the 2010 Shanghai Expo.
Most will stay for a year starting now and are looking for apartments downtown, though some chose Pudong it was mainly downtown.

Realizing that they’re snapping up lot’s of commodity out there and started putting a small squeeze into a previously relaxed market I asked myself what happens after they all leave.
Obviously, it’ll go back to it’s more relaxed state of 2008 and 2009.

But, how many people are here, indirectly involved with the expo?
And how many will stay, or more importantly leave when their employment contract expires after or during the expo year?

I looked back a few cases, and counted, there is an endless number of advertising client-el that arrived in the city because of the 2008 Olympics, a lot of them left, but some stayed.
I wonder how many stayed just because of convinience for the expo being so close a date?

We had a few engineers and IT people too, from firms, not solely working on the olympics or expo, but with a few projects tied to it.
Will the demand for this highly technical skill drop after?
How significant will the drop be if that’s the case?

I don’t know, it would be a prediction.
What I remember from the short downturn during the financial meltdown i the US is that landlords panicked, and competed against each other just 2 months in when the market was in a seasonal low anyway (christmas, western and chinese new year), resulting in some rents being had at 50% of the previous price.
Things quickly picked back up when the demand for rental properties was back to the usual high of march and april.

This year it started early, and it’s at least partially related to the expo.
Remembering the panic price slashing that time I don’t know if it’s a good thing that landlords went by without the yearly dryspell of places staying vacant for a whole month or longer (obviously, there are places like that, but these are deadbeats, bad places that stay vacant in the hottest markets anyway).

I don’t see 1000’s of places being empty after the expo, but it could easily be, that if a lot of people leave because this thing is over people go back to panic price slashing, just the difference would be that this downturn is for good.

Would a slow rental market affect prices of luxury items in the city?
I think a long slow market could do that, I mean, who wants to sit on a place they can’t rent out for the price of their mortgage?

Will investors scoop the bargains like they always did before, or will they recognize that this slow market might hold for a long time and spark a correction?

Thoughts anybody?
And please, don’t take my ramblings to serious!

Saturday, February 20th, 2010, by Oliver and is filed under "Developements, Economy, Market Theory, Rumors, Shanghai Real Estate News ". You can leave a response here, or send a Trackback from your own site.