Archive for Rumors

Shanghai, a property thriller

Midnight rambling about what’s been keeping me up.
So there is this thing going on these days, I’ve been in between a quite famous shanghai landmark sale for weeks, and could never really quite figure out why nobody else snatched it up before.

My client and I have been negotiating, and reading the financials, and in the end we figured it’s quite the deal we got on our hands.
Then, when something is to good to be true, you’ll find the catch, the Buildings lease (”ownership”) expires in 7 years.

A friend of mine pointed out that they’re selling because the government won’t renew the “ownership”.
I researched, and this rumor has been going around, and there might be something to it.

This brings me to question once again, one of Shanghai Real Estates biggest question marks.

What happens if the 70/50/30 year period on the ownerships expire?
Most people always assume there will be some kind of heavy tax you’ll have to pay, but it was always far out, and we all considered the possibility of the government taking back the property and the land it owns.

Yet, it was a long shot, considering the kind of fire that could trigger, think about it, it takes longer than 30/50/70 years for those properties to pay off (without capital appreciation).

Up until now, the city reclaimed property by negotiating a deal, and paying the “owners”.

I’m curious to see how this problem will solve, my client has already backed out, and it seems like the sale is in full process with three negotiating buyers.

In general, I would imagine the real estate bureau in shanghai blocking a deal on the property that is to be reclaimed.
Yet the seller would know this, and the banks in charge of the lending would have told us.

Funny world Shanghai, the thriller has yet to unfold it’s last act.

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Are we tweaking the numbers the other way around now

According to China Daily and reports the offiicial home prices are up by 1.5%  in 2009.

Are you serious?

1.5%
I guess you can argue that prices fell and are up just a few points since 2008, but for 2009? A real boom year?
We had so much influx in new buyers we couldn’t find places fast enough, and in the year that downpayment speculators became big?

It seems highly unlikely, in 2009 the Lakeville’s 3rd Phase re-emerged, and so did several slow selling properties from 2008.
Even though few of them sold, prices were still cut significantly in 2008 and have bounced back an astonishing amount in 2009, to many in the industry.
A boom year.
Read the China Daily Article.

Ok, maybe I’m biased, it’s only Shanghai I know and have insight too.
But there is also hainan that was on the news.
Hangzhou, Suzhou and Chengdu have rebounded, and I find it hard to believe that this was a mere 1.5%.

Filed under: Market News, Rumors, Shanghai Real Estate News | , , |1 Comment

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! :-)

Filed under: Developements, Economy, Market Theory, Rumors, Shanghai Real Estate News | , , , |1 Comment

Some People won’t sell…

For some people it’s fear, for most it’s joy, the gov. people and developers coming in and offering to buy the property you hold of your hands.
They usually offer a little more until you refuse them a few times and they offer you a huge sum above market price for your pad.

This just happened to an old guy holding a smal 30 square meter one bedroom no kitchen place on Sinan Road that is supposed to become the next Xintiandi.
Negotiating for months the developers have gotten nowhere,
our Shanghainese hero has of yesterday been offered 35 Million Rmb for his 10 square meters of the new Xintiandi.

And I write about him here, because he refused this offer.

350k Rmb per square meters for his old run down “gongfang” that has already been abandoned by most of his neighbors wasn’t enough.
Yesterday, he told us, he’s holding out for 120 Million, and apparently they can offer him this or build the new paulaners around him.

:-)

Now, that would mean Real Estate prices have still some room to go, and that this elder citizen might be shanghai’s most shrewd negotiator in the property game.

Filed under: Developements, Rumors, Shanghai Real Estate News, Trends | , , , , , |6 Comments

Chinese Stars top the real estate buyers charts

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 | , , , , , |2 Comments

What’s up at Wukang Road

Now here’s some funny thing, well, something that’s actually quite common in Shanghai, after working for sometime on the fassades for the buildings on Wukang Road between Fuxing and Huashan Road they just ripped them down again to start anew with different stones.

For little more than a year now the XuFang Group, probably Shanghai’s number one Real Estate holder has bought out the residents of the block (except the one’s of the former Caldbeck McGregor Building no 99).
The average price for the garden villas was about 80′000 Rmb per square meter, and the original plan was to combine and renovate and resell it again to affluent buyers one building at a time.

The Plan is to transform Wukang Road to a pedestrian street like Yandang Road is supposed to be in front of Fuxing Park.
It’s a nice idea, and would definitely be a suitable location, being close to the kerry residences, the pinnacle huashan, gascogne and the infamous ferguson lane developement and right by my office on Wuyuan Road.
I’m sure it would get lot’s of traffic from the Center too.

They Started re-doing the outside of the vegetable market too, what I’m asking myself is, will this stay for a pedestrian street?

Not sure, but will post some updates with pictures once the work is done. 

on another note, I just got a new place a few days ago and started renovating on sunday.
I will document the process this time because so many of you have mailed and asked us how we do create the best places in Shanghai ;-p.
It’s our biggest project so far, and will take me about 3 months (2 and a half if they’re quick).

here’s a link

 http://www.shplace.com/yongjia-road-documenting-the-creation/

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One of SH’s Real Estate Markets biggest problems? Confusion.

Alright, alright, I probably could have chosen a better title. thanks for letting me know.

 

A few days ago a long time customer of SHPlace called me to see if the rules changed again for foreigners loans and the limitations that were put in place when the market was red-hot.
He actually wanted to know whether the new law that was put into place late 08 that only requires 20% downpayment to buy a normal house is now also true for foreigners?
Or if they loosened the restriction of the property. (A normal house is no bigger than 80sqm, 2 bedrooms, and doesn’t cost more than 1.5 million at the time).

I didn’t think they changed that law, but I still had to consult other people.
I called a few of my friends at different companies and bankers to see if anyone heard something.

I was stunned by the responses, because they were all different, and nobody was really sure. 

All these new regulations and laws, stimulus packages, taxes that are no more are supposed to give buyers and sellers confidence in the market.
I’d say with the confusion exactly the opposite was achieved.

What could the solution be? A hotline, (well, that one actually exists, but you get handed from one person to another so many times that asking your question to the right person is already a science. For those that want to try, 58881688, if you’re outside of Shanghai Dial 021 first).  Oh, and did I forget to mention that each districts has certain new rules that just apply to them too?

Obviously, all new regs are very well thought through, and with the best intentions. The City Government has shown us again and again that they’re up to the task.
The problem here are not the regulations, but the communication of them.

My 2 Cents;
I think a simple site, and one hotline, with one person that knows it all on the other side could take buyer and seller confidence a long way.

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City to offer “citizenships” to property buyers?

An interesting article was published on the Shanghai Focus Website on Friday.
It is suggesting the the local government is considering reviving the ‘97/98 policy of offering Shanghainese “Citizenships” to affluent property buyers in the City.

The policie’s goal is to attract buyers from other provinces to the city, bringing both, capital and talent to Shanghai.

If there will be action and a similar policy put into place it is not yet clear what regulations there will be for the properties and individuals qualifying.
Quite possible that there will be capital limitations and requirements of a certain educational background.

The policy did actually work, and housing trippled within four years after the economic collapse of asian markets in 1997.
In 1997 the total residential area sold was 6.9 Million square meters, in 98 the total was up to nearly 12 Million square meters and in 2001 it already hit 17.8 Million square meters.

A popular chinese finance portal conducted a survey of recent buyers and found that about 46% said their number one incentive to buy Shanghai Real estate was to obtain the “citizenship, or grean card” the city was offering.

The article itself and many comments on the site are very optimistic how something like this could actually work to curb the transaction volume which has been close to nothing recently.

Funny, amidst the current financial crisis, and failed attempts to rescue the credit markets you would think that a few people could say that artificially keeping prices inflated in a downturn may only make matters worse in the future.

Filed under: China Real Estate, General News, Market News, Rumors, Shanghai Real Estate News | , , , |No Comments

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