Merrill Lynch came out first to say that growth has bottomed out in China during March.
Car Sales are through the roof but the manufacturing industry is still not out of the woods.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9MWMeXMvBP8&refer=home
I’ve spoken to some investors lately though, and it seems they’re quite confident for 2009 and their businesses here, that’s significant, because most of them are still withdrawing money abroad to invest it in china.
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Shanghai’s market is a truly funny (ironic) place.
The Market has followed the global downwards trend lately, more leases are broken by leaving expatriates and those whose companies just can’t afford it anymore.
From my observation the places hit the hardest are the Qingpu, Pudong and Gubei Villa areas.
My theory is that this is mainly related to which industries have been hit the hardest in the probably first contraction of the global economy in about a century.
You have to know the demographics of the expats staying in these areas, they’re mainly families (whose packages tend to be higher) with the working part of the houshold being in the manufacturing industry.
With the global demand for chinese exports diminishing the need for qualified “overseers” is too.
Companies are cutting down the workforce and shutting down factories and quality control centers.
The communities in the villa areas of Qingpu, Gubei and Pudong area built along these factories and therefore are more vulnerable to the kind of downturn we experience at the moment.
Downtown isn’t exactly immune to it, but so far it has weathered the crisis far better than other spots in the city.
There is a lot of people out there looking for deals, and trust me, there area lots.
But these deals tend to be in the smaller property range (usually 1 bedrooms) of which are more available.
There is a strange drought on historic places that are larger than 2 bedrooms and baths.
A lack of supply we didn’t even expect in the best of times.
I think this is because the companies and expatriates working in the industries directly related to chinas internal economy are still doing well.
Or are at least not experiencing a signifacnt fall in sales and profits.
As more chinese who are also affected by the export downturn are starting to cut down on spending and become more frugal this might change though.
You can already tell by the many empty shops in the downtown area that aren’t picked up as fast anymore that people are struggling here too.
Time will tell, and Shrealestate is here to document it 
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When property first started getting hot here, most investors came and, well, made amazing fortunes.
After the 2005 downturn, property was still hot, but more of those investors already had quite some capital to go around with, and they knew the boom-days for flipping are over.
I remember talking to some of my Whenzhou Customers, who buying up small properties everywhere, whenever they could, 3 or 4 a month usually, sometimes more.
They weren’t planning on selling the places in the near future, but they bought everything as long as the investment could attain the magical 8% return on capital by renting it out.
Obviously, Today, I think if any of the new apartments can get a 2% RoC they’d be doing pretty good already.
Shanghai’s French Concession is different.
Maybe it’s the trees, the tranquility, the neighbors, the small town feeling, the downtown location, the historical architecture, old treasures and mystery or any of the other things that this area has going for itself.
It’s hot, old houses that anybody but shanghainese, can buy are low on supply but very high in demand.
The same is true in the french concession’s rental market.
Also because most original landlord’s have “different tastes” than western tenants expect in renovation and furniture.
What makes a good place in the french concession?
It’s some outdoor space, a good location, a clean lane, and quietness.
Though not in the plenty, there are properties in the french concession that fit this description and are still attractively priced.
To me these prices are around 25′000 Rmb to 30′000 Rmb.
To illustrate this with some simple examples I take the average of this range which equals 27′500 Rmb per square meter.
And multiply it first by 65 which is about 1′620′000 Rmb.
Now, our ideal 65 square meter 1 Bedroom place in the french concession would be somewhere between jianguo rd and changle road, east of Huashan and west of Changshu Road.
It has high ceilings, and is a ground floor with Garden.
The Garden adds siginificant value, and the high ceilings offer the possibility to add a lot of extra space. (sometimes, part of the garden can also be added).
The Renovation will cost you between 80 and a 100 Thousand Rmb, we’d add radiators, double paned windows, and some humidity control, plus of course, the modern, renovation.
To our experience, if well done, the place will rent between 12 and 15k rmb. Depending on the space added and sqm of the Garden.
This means, RoC will be between 8% and 11%.
Now theory is the smaller the place, the higher the return.
The same calculation with a 100 square meter place that would cost about 2.75 Million Rmb.
Usually these places rent faster, but for less per square meter. Ideal place here has a garden, or terrace, and is a two bedroom.
It will probably rent between 16k and 25k a month.
In this perfect world the least we would get 192000 Rmb a year, or 5.26% RoC.
The median rent would be around 20 thousand a month, 240′000 Rmb per year or a 6.57% RoC. The best case scenario would yield 8.21% a year.
These are a few places that savvy investors picked up, remodeled and rented through us.
This Wuxing Road Place in the picture above has been rented out for 2 years and yields around 7%.
This ground floor garden property set the landlord back about 2 Million and has been rented out for 15k last month, which translates into a RoC of 9% per year.
It isn’t for everyone, countless missteps by other investors have shown the risks.
But a sharp mind, a good eye, a calculator, vision and knowing when to make the move will offer rewards, especially in times like these.
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According to official statistics the country’s industrial output grew 5.7% in december or 0.3 percentage points faster than the month before.
Light industry is outgrowing heavy industry in these harsh times.
In December 2008, China’s light industry enjoyed an output growth of 8.1 percent year-on-year, which sharply outpaced the 4.7 percent growth of heavy industry.
I think the next line is very intriguing;
In December, state-owned and state-controlled enterprises witnessed an output drop of 0.6 percent, while that of private enterprises went up 16.3 percent, overseas-funded enterprises was up 0.3 percent.
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