Archive for General News
Ok, just before you go like, dude, come’on.
I know, many of us here, who are involved in a little local business are aware the the country is wasting infrastructure money on purpose.
And uncovering in the article means in general, one guy was pocketing to much, maybe flaunting his or his brothers in laws riches with fast cars and big mansions, so that his buddies got jealous and/or upset and busted him for it.
But wait, after being cynical, read the numbers people.
It’s big, and going back to being cynical, it’s probably still just 1/10th of the shadow economics real numbers.
Ignorance is bliss 
!
To the Links
the Article.
Real Estate, not the big over investment problem in China
The Oxford Review Paper:
Survival of the unfittest, why the worst infrastructure gets built and what we can do about it.
Filed under: China Real Estate, Economy, General News, International News | Economic Research, Economy, Funny, Infrastructure, Joke|No Comments
Haha, the news, always first and ahead of everyone
Shanghai housing prices to drop in ‘12: mayor
China Daily
Shanghai reported the first monthly drop in prices of new residential apartments in October. For the whole of 2011, new residential apartments were sold at an average of 22432 yuan ($3532) per square meter, according to estimates by real-estate agents.
Filed under: China Real Estate, Economy, General News, Shanghai Real Estate News | China, Economy, News, Shanghai Real Estate|No Comments
Read an interesting article today on Business Insider by by Patrick Chovanec on the real estate downturn here in China that’s been coming more and more into the light in recent weeks.
He points out how everything is unraveling lately, and funny his first point is the Sanya, Hainan slump, which I’m not going to argue with, for everybody knowing me, knows that we burned our hands and I’m soon going Suicidal with our SHPlace Hainan Division’s business success (or better non-success).
The first couple of months in 2009 turned out amazing, we started with a small office of 5 people (which quicly grew to about 60) and we’re able to sell units everyday.
Property buyers made it a habit to bribe agents to get units (from a couple of 100k to 1 million rmb even),
and we in turn had to handover those bribes to the developers sales people when they made their pick who gets to buy this super exclusive piece of real estate.
Crazy enough, everybody bought cash, and no loans, as such was the custom in Sanya.
Then soon after, things started to slow, not at once, but in time.
Now, about 2 years later, it’s dead, nobody buys, people who bought aren’t selling, and developers cut prices like mad.
One of the hottest places we marketed has cut prices by 60% this year, and still, it’s hard to find takers.
One should have seen it coming at prices close to those in Shanghai’s hottest location.
Which brings me to the next point, Chovanec argues that it’s a natural downturn and that because the governments moves where started 2 years ago, they haven’t had a hand in it.
I totally agree it’s a bubble, in fact, I have said this since years ago, only to be always proven wrong (semi-wrong, I still think it’s a bubble) time and time again with new price highs.
Being on the floor (I think it’s the Wall Street Bankers term for it) here, we’ve seen and noticed the restrictions, in the beginning, not much changed, not nearly enough to make an impact.
Buying Restrictions are great in theory, but this is china, people always find a way to cross the river.
Nobody in the business I knew took it really seriously, and the few, first restrictions that were added in the beginning were a literal joke and too easy to overcome.
What makes me say the intervention (if it was intended to be in this scale or not I leave up to others to question) has worked is that they added slowly to the pot until the scale tipped.
From where I stand, what in the past year has really messed things up is the credit market, tightening has gotten worse, and more and more you can’t get a loan for that pad of yours.
And they have been quite busy taking more and more measures, because it isn’t easy to restrain this beast that is the chinese real estate market and it’s lending.
Shit hit the fan when developers have found it more difficult too to get access to credit as well, ( we all knew the game from before, “eine hand waescht die andere” but now banks had no money to lend to developers even if they wanted to).
At first this was offset by private lenders, at some point, at least now, that doesn’t seem to be an option anymore either for most.
And adding to that they can’t unload any of their properties because there are no buyers anymore you find yourself in a cash trap.
See this from a developers eye.
You commited to many more project, because you based your future on the ever going trend, profits and turnover were scandalous.
You buy more land, in many cases with requirements to build on it within a certain time frame to keep you from speculating (irony anyone?)
Now you bought this land financed, with only a little cash up front from your side, and the rest being lent, by banks, institutions and investors.
You count on completed development sales and in-developments pre-sales to give you the needed cash to mortgage yourself more and start building on this land.
You do worse then expected, but still, enough to at least get that shovel in the ground and lay base hoping for things to get better, well, actually,
you EXPECT it to get better, because this is china.
No way the big boys are going to let that horse who pulls their chariot (the economy and growth) run out of water…
Up until now, it looks like this is exactly what’s happening.
You see that they had enough, you kept going way to fast, and this expensive chariot seems to be so worn down, that if continuing at this speed, there will be a full out crash, and it will be beyond fixing.
You realize they tried to tell, slow the hell down boy, or we will, for the sakes of the people on the chariot, nobody listened and like any good roman would do, they take away your hooves so you’ll be in excrutiating pain to keep you from speeding into neverland.
Chinese Real Estate is not going away, and to me, until the 2012 leadership change, I don’t think anything super drastic can happen.
But slowly, they’re weeding out the over eager horses, the ones that pulled to fast ahead, and we’ll be left with fewer who will pull the chariot at a slower, more sustainable space.
Before that, pain.
There is another interesting point in the article, it’s the obvious reliance on local governments on land sales for their revenue.
According to the Article, Dalian’s revenue is down 50% Nanjing and Wuxi about 30% Wuhan Beijing and Shanghai are lingering around 15% from last year.
I’ve said this many times, this is actually a super big problem, which can be solved though.
I believe the chinese need more choices where they can invest their money.
China needed a Bond Market, not the crap that’s out there right now, but at least it’s slowly getting into place.
Something sophisticated where you can spot the cheaters easier because institutions will do their homework and ask questions for their own protection, not your friends who will turn an eye when you play with the numbers (just a little can’t hurt right?) because it’s in their best interest too.
Filed under: China Real Estate, Credit, Economy, General News, Market News, Market Theory | China, Opinion, Real Estate, Shanghai|2 Comments
I love this, seriously, I mean it seems like the big CP is a tightrope walker very, very high up,
balancing growth, social stability, national security against inflation/deflation, economic disaster and political exodus on it’s pole.
For now we’ve done well balancing the weights equal on each sights, so that the last couple of months of credit tightening has worked to cool the market, yet, we miss the balls to actually see it through, and kill the credit that has allowed speculation, and inter lending, car and art leverage to spur up.
I sort of saw it coming a month ago and just like they rescue us again here, they will tighten credit again, to add more weight and keep the balance on the pole, until one day, the pole breaks, and we walked up this rope high enough to see us in a seemingly never ending fall.
The New York times article for you
http://www.nytimes.com/2011/12/01/business/global/china-reverses-economic-policy.html?_r=1
Filed under: China Real Estate, Economy, General News | Credit, Funny Economics, Haha, Sarcasm|No Comments
The day has finally come, though with a debt of 14 Trillion you could have expected folks to sort of agree, to telling the US “dude you gotta stop lending and get your finances straight!”.
S&P cut the U.S. Rating from Triple A (AAA) to AA+ with the outlook negative (you’re not helping!).
Markets are down already on the realization that this inflation, central bank powered recovery is running out of steam, so, I’m quite keen to see monday.
Oh dear, this time, really, this time I won’t panic and sell it all too! I’ll be strong, and I’ll buy on the way down.
Wait, no, maybe I’ll panic.
Filed under: Economy, General News | Credit, Dept, Loans, USA|No Comments
Shanghai Real Estate prices have popped 20,000 the 20,000 Renminbi per square meter for the first time.
In the last week Shanghai’s average price per square meter has hit 20,826 Renminbi per square meter.
A magic mark, having hovered around 19000 Renminbi for a long time this year, and during the 2007 high.
Transaction volume decreased around 25% in the week from rising 5% the week earlier.
Total transaction was 296,000 square meters.
Shanghai Budget Housing launched
Shanghai has opened the run on the first 7200 units of it’s budget housing project.
The Apartment’s located in Jiading, Songjiang and Minhang which offer 70%ownership and cannot be sold wihtin 5 years, will sell for under 5000 Rmb per square meter.
The run on the properties have been big, but the rules are strict;
each applicant must hold a shanghainese houshold certificate for longer than 7 years, and must have lived in the district of application for at least 5 years (means the registered address from what I understand), the household average maximum income per head is no more than 27600 Rmb, and their assets are not to exceed 70,000 Rmb (per head).
and other criteria…
The properties limits are also set according to each household’s unique setting, say a family with a child younger than 8 years old is to apply for the 61sqm unit.
Developer demands VIP card to see model room
What the Property Community names as the most “NIU” (sort of means “able”) developer in town has asked people interested in buying their product (villa’s) averaged at 17000 Rmb per sqm to first buy a VIP card for 300′000 Rmb. Or they won’t be shown anything in the compound!
The approach seems to bear fruit, the development has already transacted more than 90 Million RMB worth and it hasn’t even officially opened yet!
Filed under: Developements, General News, Shanghai Real Estate News | Market News, Shanghai Property Market, Shanghai Real Estate, Stats, Trends|1 Comment
There was a real interesting article on Focus Shanghai recently, examining the new house supply in the city and the rapid consume recently.
According to DTZ Shanghai’s housing reserves are still feeding from new developements from 2006 and before.
The Real Estate Industry in China considers Housing Reserves as what is extra after what the market predicts will be consumed in 18 months.
From 2006 until now, Shanghai’s Reserves have been exactly 0 (spelled out zero).
The Research expects the reserves to be 0 and be mostly used up within the next three years.
Much of this the research pushes to foreigners, beginning to actually settle in the city.
After years of renting, affluent migrants, and expats are beginning to see Shanghai as their permanent home, hence the recent buying spree, after the recent slump last year many people started to pick up bargains and prices rose quickly again putting buyers under pressure to avoid ever rising higher prises.
Quite amazing, thinking of oversupply, being in this market. The bearish mood. The news from the western world.
But, also, the recently sold out Wellington Garden (after being a drag for 6 months), raising prices again after quickly lowering them last year.
The Casa Lakeville going like crazy and even the Tomson Riviera (China’s so called most expensive luxury housing) supposedly selling more than 20 units this year already.
Shanghai’s Real Estate market, something truly interesting to watch these days, the total makeover for the expo,
Expats really “settling” here, the new Jing An Temple Skyline, the tallest tower so far (Shanghai Center) and the 22 Line Metro Grid.
Filed under: China Real Estate, General News, Shanghai Real Estate News, Trends | China Real Estate, Real Estate News, Research, Shanghai Real Estate, Supply and Demand|No Comments
This is some worthy news, though things are still all gloomy, at least here in china, singers and actresses are splashing the cash again for their new homes.
Gigi Lai, the famous 28-year old actress who is the star of the HK Series “the gem of life” and “ultimate crime fighter” has spend an amazing 280 Million Rmb [plus extra costs] (41 Million US$) for her new Penthouse overlooking Hongkongs victoria harbor.
And Taiwanese actor, singer and pop icon Jay Chow has also gotten himself a new pad in Taipei, 260sqm for more than 70 Million Rmb.
Compared to those two, J.Lo’s new 2.05 Million US$ Apartment in Manhattan seem’s almost too cheap for the Latina Queen.
Filed under: Economy, General News, Rumors, Trends | Chinese Real Estate, Hongkong Real Estate, Real Estate, Rumors, Taipei Real Estate, World Real Estate News|2 Comments
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.
Filed under: Economy, General News, International News | Analysts, China, Economy, Reports|No Comments
Few days ago I was struck by this article in the new york times.
It’s about a few people’s stories who made downpayments of several hundred thousand dollars for developements that weren’t finished then.
Most of those represented 10% of the actual price.
Now that there is a credit crunch, those sweet 90% low interest mortgage deals are no more, many of them require 20% to 50% down nowadays (depending on junior and jumbo deals if I got that right).
So if you paid an initial 100′000 US$ down on a place that’s 1 Million in total you’d have to come up with at least another 100′000 US Dollars or you’re deposit will go up in smoke as the article states.
That’s pretty harsh, but from the article it seems fairly common.
Now, I can tell you, this would never happen in China. The government would rather have the developers give the houses away for free than face a horde of angry people (who are many), that just lost all their savings.
I’ve been really thinking about it, and it doesn’t seem like this is going to change anytime soon.
The Party is very people concious, actually a lot more than anywhere else in the world, and if you think about it, that’s a good thing, at least in the short term.
Policies are always going to favor the individual investor.
Because as long as they keep the bull running, who cares about anything else?
Filed under: General News, Trends | International News, Market Trends, North America, Real Estate, Thoughts, United States|No Comments
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