Archive for China Real Estate

Taking the RMB out.

I don’t know if you’ve been following my twitter, no worries if you don’t.
But I mentioned that I’ve been seeing a lot of buddies of mine taking their collateral and snubbing the banks because they won’t feed they’re ever growing appetite for capital anymore.

They’re is an endless option for capital out there if you’re willing to pay the price  (30% interest in some cases).
And just for your info, my twitter is shanghaiplace.

We’ll don’t wanna say told you so. But ya know….

The mainland’s four largest banks have been hammered by a big outflow of deposits that are ending up in private lending markets, the state-run China Securities Journal reported yesterday.

In the first 15 days of September, combined deposits at the big four plunged by 420 billion yuan (HK$512.7 billion) from the end of August.

Bank of China (3988) saw a drop of 180 billion yuan, while deposits at the Agricultural Bank of China (1288) fell by 140 billion yuan, the paper reported. No figures were given for ICBC (1398) or China Construction Bank (0939).

The sharp decline in deposits slowed down banks’ lending. New loans given by the big four amounted to only 87 billion yuan in the first half of September, versus 186.7 billion yuan for August.

“Amid high inflation and real negative real interest rate, clients prefer withdrawing their money out of the banks for loan-shark lending,” said Hu Yu, a Shenzhen-based analyst with Chinalion Securities.

Deposit rate in underground lending businesses in Wenzhou, Dongguan and Fuzhou are said have hit 36 percent a year – 10 times the benchmark one-year deposit rate of 3.5 percent.

Even state-owned firms such as China Mobile (0941) have set up a financial arm to venture into the loans business, while PetroChina (0857) already has a number of financial vehicles in place. Meanwhile, local fund manager Value Partners (0806) and jewelry retailer Man Sang International (0938) have started a microcredit business in the mainland. NATALLIE CAI

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Beijing and Shanghai homesales fall, prices increase in Shanghai yet fall in Beijing

Soufun.com’s researched arm just published that sales in Beijing fell 19 percent in the first three quarters of the year and prices dropped an average of 10%.
In the meantime, Shanghai’s transactions (on paper) are down 5% yet prices rose 14% in the period from January 2011 to September.

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Blackstone selling Channel 1 Mall to New World

Channel 1 Mall Shanghai

Channel 1 Mall Shanghai

Blackstone the “glamorous” american buyout firm is selling it’s Channel 1 Mall on Changshou Lu (Shanghai Reailway Station) for 1.46 Billion Rmb to New World Developement (you know the ones that are responsible for that k11 damage done to Huaihai Road, at least this time they’re not hitting prime location in Shanghai).

Blackstone bought the Mall a couple of years ago for 1 Billion RMB from a Hongkong Investment firm when still vacant, it has succesfully transformed it and upgraded it to about 95 percent tenancy ship.

Funny, Blackstone is also actively seeking 5 Billion for it’s China Buyout fund, seen better deals eh?

Oh, and just btw, Greece Default set?
Prepared?

Filed under: China Real Estate, Developements, Economy, Land Sales, Shanghai Real Estate News | , , , , |No Comments

KKR and Sino Ocean Land set up 140 Million US$ China Real Estate Fund

Seems like it’s really us against you.
The big C seems to try everything possible to keep the ever rising real estate, property and land prices from continuing they’re relentless upwards sprint.
Investors, Developers, Banks and REIT’s seem to not getting the message, KKR and Sino Ocean Land just set up another Real Estate Investment Fund of 140 Million US dollars, nearly half of which will be invested in Sino Oceans Chaoyang developement.

Loans and Credits reached a new year over year high, despite 20% corporate interest rates, and requirement barriers set up to keep people from buying property they don’t need and just want for pure speculation.

Developers confidence doesn’t crack either, and new land deals are closed every few days.
Transaction volume has plummeted and places like Number one on Xinhua Road here haven’t sold a unit for months.

Where do we go from here?
The economy and property sector are so closely linked that I’m not able to make a prediction anymore.
Demand is still high, it’s just not coming from those you want it to. The Consumer.

In the meantime, a Beijing Tycoon wants to buy 0.3% of Iceland.

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Think there will actually be an end to this at one point?

For most of you that know me, I have been in a dilemma for the past few years, running by some amazing opportunities, but always feeling the market has rushed up to much.
I felt like this since about 2008 after the small dip and rebound that came along with the financial crisis.

Now think about how the big party must feel, trying, yet, not being able to reign this big red dragon that is china’s real estate market.

Don’t get me wrong, there is value, it makes a lot of sense to pay a premium especially here in Shanghai, in a city where expatriates, enterpreneurs, and migrate workers are flowing in, settling, and calling it their new home.
Where incomes surge, and fortunes are created and go bust every day (probably every hour), where you can make money in endless ways, and where, sometimes, actually most of the times, location is everything.

I have been here, and fell in love with this business, only because it’s china, and the endless real opportunities i’m presented here everyday.

They’re trying to focus on Shanghai and Beijing, and the investment just flows westward, Xinjiang’s Urumqi is one of those benefiting where some prices have allegedly risen 50% this year already.

It seems like whatever is done, the market has an answer, and Real Estate still seems a safe bet.
A slowdown, yes, but only regionally, with the increases being moved elsewhere by the same people (buyers and sellers alike).

Rising interest rates, and bank limits as well as taxes have shown little effect.

May I suggest something more drastic.
Introduce an alternative, maybe uhm, a bond market?

Filed under: China Real Estate, Market Theory, Me | , , |No Comments

Tencent is offering 156 Million US$ interest free housing loans to employees

Now, there is a way to cope with the rising real estate prices in China!
Become a Tencent (the guys behind QQ, QQ games, those funny card games you see your chinese colleagues play online, paipai.com and others) employee!

Tencent is offering interest free loans to employees that have been with the company for longer than 3 years, and it said to keep 1 Billion RMB on the side to just do this.
Employees will be able to borrow up to 300′000 Rmb per person.

China has been raising interest rates, and pushed up bank reserve minimums in the past months, to make it more difficult and less attractive to buy property in a try to slow this red hot market a little bit.
So far, with little success, as the appetite for property seems to only grow stronger and credit can be acquired for the right price anywhere.

Filed under: China Real Estate, Companies, Credit, Market News, Shanghai Real Estate News | , , , , |No Comments

China property investment more than the whole world combined?

CNBC news release of a cushman & wakefield Report on global real estate activity showed chinese markets up 242% in 2009 or 156 Billion US Dollars.

The whole list.

china $156 billion
hk $9 billion
UK $39 billion

USA $38 billion
Japan $19 billion
Germany $14 billion
France $10 billion
South Korea $10 billion
Australia $7 billion
Taiwan $5 billion

http://www.cnbc.com/id/35676535?slide=1

On a sad note, it seems that J.G Ballards Shanghai home has fallen to the developement.
I recently passed by and noticed the Restaurant SH508 has closed (it moved to somewhere else, I seen it too, but can’t remember now).
I had in my wildest dreams not been able to imagine it being destroyed.
http://shanghaiist.com/2010/03/10/the_disappearance_of_jg_ballards_sh.php

Filed under: China Real Estate | , , |1 Comment

Mainland buyers rush to snap up Hong Kong luxury

What may come to no surprise to some is that mainland buyers are increasingly snapping up Hong Kong luxury properties recently.
1 in 5 luxury properties in the island city (a property sold at higher than 10 Million Hong Kong Dollars is considered luxury) comes from the mainland now.
The more accurate figure is 18.1 % according to Centaline Property Agency or Zhong Yuan.

Since the downturn in 2008 more and more Mainlanders rush to the island to buy bargains deemed good investment.

Shanghai itself has slowed down a bit and transaction volume is siginifcantly lower.

It’ll be interesting to see what comes after the holidays.

Happy chinese new year everyone, may the year of the tiger bring health and success to all of you.

Filed under: China Real Estate, Market News, Trends | , , , , |1 Comment

A Buying Guide to Shanghai Real Estate for foreigners

Not a usual post but I thought this might help a lot of you out there looking to buy a property in China’s No 1 Cosmopolitan Jungle.

Well, Step .1 is to get in touch with the best Real Estate agency out there, and check some awesome place at their Sales Site.

:-)

But all kidding aside, number one is really, really find a good broker, there is regulations and restrictions, and if you’re not best bro’s with your company superior and HR (for income statement), make sure you get the guys to make a check on what loans you can get.

Step 1
Souting.
Finding a house can be easy or tough, if you know what you want it’ll be easy, for newer place you’ll find stuff to compare but for rare pads such as old houses and super exclusive boutique compounds you may find that the one place  you’re looking at is the only one for sale.
You won’t be able to compare it with different style housing next door or in the area in most cases as they vary so much.

The best way to find out that what you’re paying is right is to ask for previously sold places prices.
Increases are normal, and it’ll depend on the timespan but you can compare it with the general market and increases in more populous complexes.

Step 1.2
Probably needless, but I’ll still put it out there, don’t take the asking price if you have other choices.
Negotiate, and maybe see if the landlord is willing to give you some incentives, like a new water heater, or other things that are small but a major improvement to the current state.

Often I’ve successfully negotiated landlord’s paying all or part of the other sides taxes, or sometimes the agency fee.

Step 2
Making a downpayment.
Once you found your place, negotiate price and terms through the broker, and if needed checked that you can get an adequate loan on the place (emphasized because of importance!), it’s time to make sure that there won’t be some evil twin of yours to snatch this place away, make a downpayment.
Unless you’re with SHPlace “A Place in Shanghai” the best brokers on the planet :-) , you should not take the broker’s word for having negotiated the terms successfully with the landlord.

In all cases, ask to make the downpayment directly to the landlord, and sign the agreement at the agency.
If that’s not possible there is another way.

In many Agency’s downpayments are made to the brokerage company.
They will sign an agreement with you.
Make sure it states in the agreement when the landlord will sign this too, 3 days is good rule of thumb for the seller to consider agreeing and picking the money up at the agency.
Of course there are special occasions and you should use your better judgement to give more days to somebody.

Step 2.2
Look through the downpayment agreement.
-Make sure all negotiated terms are stated
including the price, contract sign date and payment steps.
-Get all the valid information before from the seller (prepare your own too).
-Check the breach, usually it’s just what you paid.
Say 50k downpayment, landlord decided not to sell or failed to sign contract at the agreed date they should pay you 100k in compensation. (50 plus 50).

Step 3
Signing the contract.
You want to save time, and I suspect the seller and agent too.
So, have all your things ready and ask the agent to make an appointment with the loan banker too about 1 – 2 hours after the contract signing appointment to get everything done in one go.

As a foreigner you have to have a notary do a few things for you, so ask the broker to make this appointement a little before the contract signing, or the day before just to be sure all is done.
You’ll have to pay him a good chunk of money too, the notary fee for foreigners buying or selling is calculated in percentages and will be around 0.15% and there is a special commie party fee that is 17500 (which you’ll pay at the exchange bureau) for non-standard housing (luxury is non standard for example).

After all that is done get on to signing, if you don’t speak chinese yourself, have somebody there to look through the contract.
There is no such thing as a legal valid English contract (that would be illegal), they printed out in chinese by the exchange bureau by a network linked computer in the agency.

All is done, you signed, and the agent took the ownership from the landlord.
Now you should have three dates
first payment date, main payment date and last payment date you do after everything is handed over (which is usually a very small amount).
Please, make sure the dates are in line with the bank loan payments (which shouldn’t take long at all) and your getting your hands on cash.
Also check how much the breach is.

Most likely you’ll have to sign a “single” paper for the notary stating you’re not married.

It’s quite normal that you pay the broker after the contract is signed already.

Step 3.2
When you make the first payment (after the downpayment) which is usually around 25% of the total have the agent bring a receipt he can co-sign (witness).

Also do this for the 2nd and final payment.
The Final payment is small amount you retain in case there are outstanding bills etc.

Step 4.
When all is ready you’ll meet at the exchange bureau.
Here you will sign over and pay your taxes,
usually, if not agreed differently or changed your taxes will be;

your biggest one will be the 3% property tax which is called the “Qi Shui” Qi meaning Lease, and Shui is tax.
then there is the exchange service tax which will be 2.5 Rmb per square meter.
The Contract tax will be 0.05% of the total

There will be some other small fees (couple of hundred each) and the Communist Party fee of 17500.
So you should expect a total of 3.2% in Taxes (3%+0.15%+0.05%) plus 2.5RMBxsqm, plus 17500 Rmb, plus 1% agency fees and maybe 2000 Rmb in other exchange related fees.
Step 5.

You should get your new ownership certificate after 20 days. Few days more
Use this to change the gas, water, and electricity in your name.

When all is good your ready to pay your retainer and enjoy your property in China.

Filed under: China Real Estate, Help Guide, Shanghai Real Estate News | , , |3 Comments

Shanghai Property markets continue to climb up, and a new kind of speculator has emerged

Shanghai’s Real Estate Market climbed another 3.9% in October after briefly slowing down in September this year.
Real Estate investment in the city is up 19% for the year and the total transaction volume is up nearly 50% for the year.

Prices also rose 56% year on year and news about an interest hike have not slowed the run on shanghainese properties yet.

With prices escalating into the clouds and new loan rules tied together with the profit taxes introduced in 2005 it’s become a lot harder for speculators to flip properties for profit in the city.

But, as always, Shanghai’s property people found a way. Several people are getting on the boat to place downpayments on hot new luxury properties like the Bund Summit (or Bound on the Bund now).
I read on sh.focus.cn that speculators make the downpayment, pay the broker and wait for somebody to take the bill of their hands for an “extra fee” of 500k to even 1.2 Million Rmb in one case.
The bet seems to pay off, 43 property transactions and counting for the 60 thousand Renminbi per square meter luxury development on Shanghai’s Bund.

Filed under: China Real Estate, Market News, Shanghai Real Estate News, Trends | , , , , |2 Comments

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