Archive for Market Statistics

Rentals don’t follow prices up

Shanghai Real Estate has been on a real run alongside the stock index this year.
Though volume has slumped prices hold up pretty well and most recently have hit new highs in many commercial centers such as Xujiahui and Xintiandi.

Why the market moves up can be argued with a lot of reasons.
What has struck me about this “real estate rally” is that there is no correlation with the rental prices.
I’ve looked back in our database back to 2005 and have found that in many cases rents actual move opposite directions.

It could be that the two are not as interconnected as previously thought, and it could also mean that the market is healthier now than before, meaning that lower rents and no rents don’t force landlords to sell the property prematurely.

I compared our database and rents were a lot higher in 2005 then they were in 2004, they also went up in 2006 when the sales market stalled.
Yet in 2007 they were virtually the same.

In 2008 rents went down from 2007, mainly because of the panic resulting from the massive failures on wall street (like bear stearns).
Interestingly the stock market came down in a craze too but sales were stronger.
They’re still moving up until today yet rentals have come down from 2008 but are a little  bit higher than in the beginning of 2009.

I link more of those to emotions, places don’t stay empty, they get rented out, fast, I would even say quicker than before.
But, Companies have more negotiation leverage, the economy is bad, and they pressuring landlords into lower prices now, and it works, mainly because landlords are letting others worry them.

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Latest noteworthy Transactions

Well, there hasn’t been many.
An Apartment sold in the Upper Eastside by a bank auction. The previous Owner was related to the pension scandal earlier last year and was indebted for about 3.5 Million Yuan.
The roughly 146 sqm Apartment sold for about  6 Million or 42k a square meter before taxes.
Quite a hassle to go through but the price is well below the usual 50-60′000 Rmb other sellers are asking for in Xujiahui’s most exclusive Residential Club. 

Another Oriental Manhattan Apartment is for sale at 29′000 Rmb a square meter, which is not as low as the 27′000 Rmb but still about 20% less than the asking prices were 1 year ago.

Despite all the chao’s Mansions’ and Villa’s in the French Concession seem to hold up.
At least for now.

Quite stunning was that even amidst the Chaos the Mansion on Gao’an Road sold for 80 Million Rmb or roughly a 100k Rmb per square Meter.
Or about half this price if you count the 1000 square meter garden as area too.
Additional Information and pictures to the House here in one of our previous ads for the property.

A few larger French Concession Villa’s have sold in the same price per square meter range but where considerably smaller.
1 Went on YongfuRoad for abouts 23 Million, 2 million less than it’s original asking price of 25 Million Rmb.
And also a little more than a 100k Rmb per square meter.
An Anfu Road Mansion near Changshu Road sold late August for 36 Million Rmb, it had an area of about 395 square meters, putting the price per square meter at about 90′000 Rmb.

A savvy Investor bought an historic Villa on Wukang Road with huge Yard by buying out three families for a combined price of 33 Million Yuan or about 50k a square meter.
A Hell of a deal.

Prices have come down quite a bit on Tianshan Road, First Phase Oasis Riviera has units for sale between 19 and 23k A square meter,  which is about 15% less than 6 months ago.
Yet next door Yanlord’s prices have changed little and apartments are still in low supply.

New Developements near Yanggao Road are selling for as low as 9000 Rmb a square meter and have drawn a lot of interest.
Apartments have been sold but generally people are still having a wait and see attitude.

Download the whole list of sales in the Puxi Area from us here 

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