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.
Over the years working in Shanghai Real Estate I have dealt with hundreds of leasing and sales offices, some of them run by large corporates like CBRE, J Lasalle, Colliers, DTZ and the likes, and the other half run by the developers themselves.
In terms of sales, well the market was great, all did great, now however, the market is slugging, and you’ll really start to see who provides real skill and value to the table.
Ask Wharf who is trying to sell the No 1 Xinhua Rd managed and sold (trying to sell) together with CBRE but mainly by themselves.
Sold a third in the first week and zero in all the months after that.
I have been going to view commercial and residenntial prime real estate in Shanghai with customers and it’s incredible, how often they will be alienated by the sales department who don’t realize that their name implies their purpose.
Today I called Sun Hong Kai properties to inquire about their mall space, with a customer who has worldwide destinations and defines locations.
The Sales lady picked up the phone, said: “wei, wei, wei” and hung up after muttering some swear words (maybe she thought nobody else was on the line but hey I did hear everything.
Called two more times and have been shoved off because she is “busy”.
The same developer though at another project in Pudong made another customer of mine wait nearly 3 hours a fortnight ago and re-scheduled twice before that.
Needless to say they’re furious, and actually only waited up for the sales people to show up so they can yell at them.
Developers have to realize that even though you’re in a red hot location, you need anchor points in Shanghai to make and define a location.
It makes the difference between the K11 which will never be anything else but an underground food court, and the Grand Gateway Malls in Shanghai which are a destination because of Element Fresh, Da Marco, Wagas, Colabo etc.
You see the people who sold the initial places, and their dedication to customer service and sales which are interlinked and you understand.
Please dear Sun Hung Kai, outsource it to somebody who knows how to sell.
Preview The HQ and City Center in Shanghai
New news on the commercial Real Estate front in Shanghai.
The City Center in Hongqiao Gubei, a developement from Macao/HK Property Mogul Stanley Ho has teamed up with TCT,
the treasury china trust to extend it’s successful City Center project in Gubei’s Central Business District.
The new developement which is to be completed sometime in 2013, will feature more than 100′000 square meters of high end retail space, and a 150′000 square meters of premium office space.
One of the Tenants already confirmed is Marks & Spencer, who already signed up for 4k square meters for their new flagship store.
Richard Barrett, Chairman of the TCT, seems to follow the confidence in Shanghai’s commercial leasing market.
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.
Channel 1 Mall Shanghai
Blackstone the “glamorous” american buyout firm is selling it’s Channel 1 Mall on Changshou Lu (Shanghai Reailway Station) for 1.46 Billion Rmb to New World Developement (you know the ones that are responsible for that k11 damage done to Huaihai Road, at least this time they’re not hitting prime location in Shanghai).
Blackstone bought the Mall a couple of years ago for 1 Billion RMB from a Hongkong Investment firm when still vacant, it has succesfully transformed it and upgraded it to about 95 percent tenancy ship.
Funny, Blackstone is also actively seeking 5 Billion for it’s China Buyout fund, seen better deals eh?
4 large plots of land have just found owners in Shanghai’s popular High Tech industrial District of Zhujiajiao which is also a
famous travel destination for it’s historic water towns.
The biggest transaction there was a 107′000 square meter plot of land selling for around 825 Million Rmb or approximately 7650 Rmb per square meter.
Bought by Shanghai Jiu Qing Real Estate which is a developer focused in the area of Qingpu.
The three other plots were as followed
68860 square meters to the City owned conglomerate SCS Group (the guys building about everything in the city) for 520 Million Rmb or about 7550 Rmb per square meter.
83926 square meters to Haibo Xijiao Logistics at about 1803 Rmb per square meter for a total of 227 Million Rmb and
25797 square meters to Shentong Express China’s answer to FedEx for 59 Million or 1134 Rmb per square meter.
Shanghai just keeps going and going, and going, it might be time that energizer lets go of it’s catch phrase and leaves it to our beloved real estate market.
According to reports, in March 2010 sales are up an astonishing 150% for storefronts and malls from february.
And 55% more than they were in march 2009.
There has been an increase in develepements, and the chinese new year holidays have certainly played a role, but this doesn’t keep me to still take a step back and glance at the numbers in awe.
The average price has increased 0.37% for march from february and is also up 48% from March 2009 and locked at 19767 Rmb per square meter average.
The city has seen a huge increase in investment style storefronts for sale in newly developed malls especially in the minhang and songjiang area, they’re often sold with tenants already waiting in line to take up the place and pay rent.
The hubs in the areas nearby major subway stops such as Xinzhuang and the new Songjiang stops have gotten a great boost in recent years thanks to the influx of people from the rural areas taking up jobs in the city and living in the more affordable areas nearby the subway stations.
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%.
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! 
What may come to no surprise to some is that mainland buyers are increasingly snapping up Hong Kong luxury properties recently.
1 in 5 luxury properties in the island city (a property sold at higher than 10 Million Hong Kong Dollars is considered luxury) comes from the mainland now.
The more accurate figure is 18.1 % according to Centaline Property Agency or Zhong Yuan.
Since the downturn in 2008 more and more Mainlanders rush to the island to buy bargains deemed good investment.
Shanghai itself has slowed down a bit and transaction volume is siginifcantly lower.
It’ll be interesting to see what comes after the holidays.
Happy chinese new year everyone, may the year of the tiger bring health and success to all of you.
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