Archive for Trends

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

Eh, I think I got the handle of it, high demand but dropping prices

So, I thought about this a long time, because it didn’t make any sense.
I tried to explain, and yet, still, it didn’t make any sense.

Places rent fast these days, even quicker than last year, and there isn’t a lot of desirable properties available, at least in the French Concession.

I guess it’s fear, now for the first time, renters actually are forced to negotiate harder, and have more confidence to do so, Landlords hear bad news all around, and though it may be one of their first visitors that take the place they are willing to accept offers way below last years price.

There are still bidding wars, but they usually start way below and still end up below the last  rental.
I think it’s a healthy adjustment, it gets people to move out of several reasons.
Some couldn’t get their current place down to a rent they find fair in the current market condition, and some just found out about the great deals available now.

Filed under: Market News, Shanghai Real Estate News, Trends | , , , |No 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/

Filed under: Rumors, Shanghai Real Estate News, Trends | , , , |No Comments

Some interesting number crunching

These are some of the latest official numbers from the Shanghai Real Estate Market.

As of March 30th there were 18771 residential properties for rent in Shanghai, representing a total area of 2.5 Million square meters.

There are 99338 residential properties for sale (11 Million sqm), out of which 47523 qualify as ordinary residential properties (these properties are less expensive and smaller, and they only require a 20% downpayment).

In the last week of March 58 Units of Yanlord Town were sold at an average of 33323 Rmb per square meter in the Huamu Area of Pudong.

Filed under: Developements, Shanghai Real Estate News, Trends | , , , , |No Comments

China’s mortgage bubble save, for now.

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 | , , , , , |No Comments

People’s square metro station

Unfortunately I have to admit I don’t take the subway a lot anymore in Shanghai. Only if it’s a short trip and very convinient for me.
What I’ve really been avoiding was people’s square though. It used to be a lot like hell on earth. And switching from line 1 to line 2 or the other way around…. don’t even go there.

Despite my earlier aversion to people’s squares metro station I went there yesterday to get from shanxi rd to nanjing rd west.

First everything was normal, except that there were very little people in the subway during rush hour. I didn’t actually have any trouble breathing. Or turning my head.
That was so so pleasant. But I was really trying to not think about the long hall from line 1 to 2, squeezing through the fences with 1000’s of other people, fighting and falling down the stairs when Shanghai amazed me once more.
The crowds are still there, but in a much larger, open and better organized space. Everything is easy to see. There is no pushing, and there are very high ceilings, it almost feels like it’s straight out of the movie Gattaca.

I walked and stared in awe at a place I’ve been to but have never seen before. It’s 100% changed, and switching lines was almost so pleasant I felt like taking the subway back again.
(It doesn’t matter that I didn’t).

Some pics from Wangjian Shuo’s blog. Guess he’s a more frequent metro traveller for he’s already found it totally changed in january last year. ;-)  

One thing for a strong real estate market is a strong, working infrastructure. This is definitely one of the best and most noticable improvements I’ve seen in the city, for,…well… ever.

I’m certain you’ll read a lot about it during the expo on people’s travel logs, and news sites.

Filed under: Developements, Shanghai Real Estate News, Trends | , , , , |No Comments

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.

Filed under: Market Theory, Rumors, Shanghai Real Estate News, Trends | , , , , |No Comments

Rental prices are falling, yes, but where exactly?

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 ;-)

Filed under: China Real Estate, Economy, Market News, Shanghai Real Estate News, Trends | , , , , |No Comments

Tomson Riviera occupancy at 20%, called a success…

The infamous Tomson (thomson) Riviera has begun renting it’s “not selling” units in october 2008.
By November it had already rented 8 Units and the count stays at 12 as of today.

This translate in a little below the 20% occupancy mark, which the developer has called a success.

Well, given the current turmoil, renting 8 units of 70 thousand renminbi and upwards is probably not bad, but I do not think you can call 20 percent a success either.

Tomson has been plagued with sluggish (none) sales, and decided to begin renting in 2008.
The 430 to 670 square meter units are selling for an average of 130′000 RMB per square meter.

Being in the business for a while, I know that there are quite a few buyers around that purchase properties at these and even much higher prices (for example in the french concession).

Among industry insiders, the general consus is; that the problem is/was the marketing of the property.
By being awefully strict, and making it very difficult for people to see or get info about the units in the tomson riviera the developer had managed to alienate many potential buyers.

A huge number of the “rich” in china are not comfortable to share their income statement (if they even have one), and they don’t want to be bothered to fill out a form, add a bank statement and all kinds of things to see a place.
They’re simple people, I’ve seen it more than once, that somebody rides a motorcycle in the simplest clothing possible in front of an agency and ends up buying a 20 Million Rmb old house the same day.

I guess they had the right idea, make it exclusive, and don’t let everyone in. But it was executed poorly.
And now this beautiful (truly amazing) property is just sitting there, in the middle of shanghai’s financial district, watching as the lakeville regency and french concession houses are being picked up at the same or even higher prices.

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

Shanghai Real Estate’s last goldmine

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.

Filed under: Economy, General News, Market Theory, Shanghai Real Estate News, Trends | , , , |No Comments

« Previous Entries||Next Entries »