|But it is
touristy, and you’re not seeing the real thing. The area was renovated
into a few blocks of touristy theme streets in 1999. Unless you’re into
novelty shops, ersatz antiques, and teahouses where you cannot get a seat,
you can safely give it a miss.
Swarovski crystal or designer boutiques, Shanghai’s newly affluent have
embraced consumerism as enthusiastically as their 19th-century counterparts
reached for the opium pipes. Shopping is definitely the new decadence.
malls and flashy department stores, the city’s premier shopping street
is Nanjing Lu. It’s partly closed for pedestrian traffic only, and
at night the neon-lit signs dazzle as brightly as those in Hong Kong. Prices
for Western designer brands seem even higher than back home, but you can
get great buys on shoes. While I was browsing, my husband picked up stylish
leather loafers for the equivalent of $13.50. One big annoyance is the
hordes of fake Rolex and Prada handbag merchants that attach themselves
like limpets to any passing Westerner.
don’t want it. If you learn only one Chinese phrase, this is a good choice.
with locals, Huaihai Zhong Lu is another major shopping street arrowing
through the French Concession area. If you’re still not satiated, take
the under-river train through the weirdly psychedelic Bund Tunnel to Pudong.
You’ll emerge almost beside the monumental Super Brand Mall. With a floor
of restaurants, juice bars, and coffee shops, it’s also a great place for
lunch. I paid less than $5 for a noodle hotpot and a beer.
For items like
silk, calligraphy brushes, porcelain tea sets, and handicrafts, the best
buys are often in the markets. But if you’re looking for jade or antiques,
be careful. Guidebooks warn that at least 85% of goods at Dongtai Lu Antique
Market (on the eastern edge of the French Concession) are fakes.
any high-value item, take a look at the genuine objets d’art in the state-run
Shanghai Antique & Curio Store (196-246 Guangdong Lu). Prices
are high, but you’ll get an idea of what a real porcelain vase or jade
dragon should look like. But note that you may have to relocate to enjoy
your treasures. Genuine antiques more than 200 years old cannot be exported
out of China.
is everywhere. I succumbed and paid 5 yuan (60 cents) for a red-tasseled
dangly thing with a portrait of the Great Helmsman embossed in gilt. I
undoubtedly possess the tackiest car decoration in the west of Ireland.
competition is far fiercer than a decade ago, some individuals have
carved out a Shanghai niche for themselves. One evening, I met IL subscriber
Mario Cavalo in a French Concession bar called Senses, with low lights,
comfy couches, and an extensive wine list.
When not indulging
his passion for playing jazz piano (catch him on the keyboards at Senses
on Thursday evenings; the bar is at 515 Jianguo Xi Lu near the American
Consulate), Mario arranges conferences and corporate training. He’s
set up his own company, Vision to Victory, and his latest gig is for Shanghai’s
German Chamber of Commerce. He’ll be taking clients to the silver-sand
beaches of Sanya—the premier resort on Hainan Dao, China’s tropical vacation
To be a
successful entrepreneur, you’ll need to emulate Mario and learn Mandarin.
Although TEFL (Teaching English as a Foreign Language) teachers
are keenly sought throughout China, merely having a degree and the ability
to speak English isn’t a guaranteed passport into Shanghai’s job market.
For one thing, huge numbers of home-grown graduates who have learned English
are now in the workplace.
are on company assignments. Management-level employees usually get
“the full expat package,” which includes private health care, luxury-level
rental accommodation, and private schooling for kids. Dawn Brandenburg
of Savills Property Services estimates that Shanghai has between 50,000
and 60,000 Western expats, 100,000 Japanese, and another 200,000 “compats”
from Hong Kong and Taiwan.
As I write,
Shanghai’s property market is effectively on hold. Prices have slipped
by 20% to 30% in the last few months. A buyer’s market could emerge,
but right now, many apartment blocks remain empty. Locals call them “lights-out”
buildings—the units are owned by speculators who expected to make shed
loads of money by flipping. They didn’t envisage becoming landlords—and
some residential buildings in Pudong’s Lujiazui area remain empty of tenants.
Until the market
comes to terms with a raft of new regulations designed to deter speculators
(detailed in the sidebar on page XX), potential investors are advised
to take a wait-and-see view. Certainly that’s what developers at the luxury
end of the market are doing. Construction has slowed right down, and a
number of developers have decided to sit on new projects rather than release
markets generally go hand in hand with hot economies and Shanghai’s had
reached sizzling levels. In the downtown area, last year’s average rise
was 27%. But over the past two years, the city’s most desirable pockets
have seen increases of 200%.
and municipal governments introduced the new regulations, apartments
around the Xiantendi neighborhood of the former French Concession got snapped
up as soon as they were offered for sale. Even in a cooling market, you’ll
find little around here for less than $500 a square foot.
reforms, Shanghai had China’s most shocking housing prices. In the
first quarter of 2005, the average square foot cost was around $120. Completely
unaffordable for the majority of citizens whose annual salaries only average
Due to earlier
housing initiatives, many Chinese effectively own the homes they live in.
However, first-time buyers on low incomes couldn’t afford to buy. So,
on June 1, the Shanghai authorities chucked a mega-sized bucket of cold
water over the market. Foreign speculators have been chased away—and local
investors who took out mortgages and bought at the peak can only lick their
online news sites such as China Daily (website: www.chinadaily.com.cn)
regularly quote from eHomeDay.com, which issues monthly statistics on Shanghai’s
(Unfortunately, the site is only in Chinese.) If the news agencies are
right, the square-foot price for many new condominiums in the city’s suburbs
has slumped from $200 to less than $160. Average for Shanghai as a whole
is now $95 a square foot, but this price includes a lot of housing in places
you wouldn’t dream of living.
A city of Shanghai’s
size has huge price variations. Looking at ads in City Weekend (www.cityweekend.com.cn),
a listings magazine, many apartments in Puxi (the downtown center)
are still pitched between $310 and $470 a square foot.
domestic airport, Savills Property Services are handling second-phase sales
of the Shanghai Racquet Club & Apartments. (Phase one comprised
193 units, the second phase has 216 units.) Prices average $200 a square
foot—apartment sizes are 2,300 to 3,500 square feet. Monthly rents are
$4,800 to $6,800.
apartments were smaller: 1,400 to 3,000 square feet. Starting rent for
these—there’s an occupancy rate of 95%—is $2,500 monthly. Facilities include
tennis courts, indoor swimming pool, gym, and squash court. The Shanghai
American School is a short walk away.
Brandenburg of Savills residential department confirmed that the luxury-end
market has also suffered shocks. From the last quarter, their own sales
have dropped by 50%. Savills Property Services (Dawn Brandenburg, Associate
Director Residential), 20th Floor, Shanghai Central Plaza, 381 Huaihai
Middle Road, Shanghai 200020; tel. (862)163-915-251; e-mail: DBrandenburg@savills-sh.com;
hooking up with Sam Crispin, another Shanghai-based expat who writes property
columns for English-language publications. Unfortunately, Sam was out
of town during my visit, but his recent articles make interesting reading.
in the China Economic Review, Sam expects the market to be quiet until
downward price adjustments are sufficient to draw buyers back. This could
take three to six months. “But owner-occupiers will continue to buy
during this period, albeit at a slower, more cautious rate.”
Sam also writes
that in areas that attract owner-occupiers, assets should see little more
in the way of price falls. “The sort of property that attracts owner-occupiers
also attracts tenants...prices tend to be underpinned by rental income.”
But with few
buyers around, some of Shanghai’s newer agencies are closing. (More
than 1,000 brokers have left the business since May according to City Weekend.)
This could explain why Savills was the only one who replied to e-mail requests
for a meeting—I contacted seven.
agency was Space (www.space.sh.cn).
This was disappointing as it’s an American-managed agency specializing
in historic French Concession properties. One of their cheaper properties—a
penthouse of 1,000 square feet with a 400-square-foot loft with “green
views on all sides and zero noise,” costs $467,400.
rent two-bedroom furnished apartments—renovated and with Western comfort
levels—for $700 to $1,000 monthly. But CEOs and general managers of
multinationals have expectations that include clubhouses, gyms, swimming
pools, etc. Average monthly rents in the “expat package” apartment
sector stand at $2.40 per square foot.
With few new
luxury developments coming on stream, there’s now a shortage of top-range
rental property. And rates are climbing. Savills says average renewal increases
are already up $500 to $1,000 on a $6,000 monthly lease.
“lights out” apartments in Lujiazui, occupancy rates in the niche
foreign rental market are high. According to Savills, it averages 93% for
luxury apartments and 95% for villas. The most desirable locations have
expats without families gravitate toward downtown Puxi. Here you’ll find
newly built modern high-rises as well as late 19th-century colonial property
in the former French Concession. Rentals for renovated lane houses (1,700
square feet) start at around $3,500 monthly, but can reach $7,000 for larger
stone buildings converted into shops and restaurants, Xiantendi is a French
Concession enclave. Its name means “New Heaven on Earth.” A
step away towers the new Jin Lin Tian Di apartment complex—here rents are
$5,500 to $8,000 per month. The smallest unit is 2,600 square feet. The
financial giant Morgan Stanley bought a number of apartments when the complex
came on the market.
proximity to international schools. These are mostly in the western suburbs
of Changging District or east of the river in the far reaches of Pudong
District. Both areas are a 30- to 45-minute drive from downtown.
in the 1990s, the Changging District is a major expatriate residential
area, particularly the Gubei neighborhood, which has a branch of the French-owned
Carrefour supermarket. The housing mix includes apartments, stand-alone
villas, and gated villa compounds. Two- and three-bedroom apartments of
1,150 to 2,800 square feet are mostly $1,450 to $3,000 per month. Top-end
three-bedroom apartments can command $4,500. As there are also some “lights
out” highrises here, rents may fall.
Shanghai’s second-largest expat community, the Pudong District has
seen plenty of recent development activity. There are apartments around
the financial center, but much of its housing is high-rent villas, often
in gated communities. Starting rent for a 2,600-square-foot house with
a small garden is $3,500 monthly. A 3,600-square-foot villa in a compound
with gym and swimming pool can be $6,600 or more.
average rent for Pudong villas as $197 a square foot per month, with luxury
villas more like $223 a square foot.
A number of
rental agencies advertise in City Weekend, an English-language magazine
published every two weeks. Judging by the size of their ads, two of the
largest are Phoenix Property Agency; website: www.shanghai-realty.com
and Oxford & Associates; website: www.jiayide.com.
New Property Rules
government has introduced a nationwide 5% tax on profits for investors
who resell within two years of purchase. Local authorities have a certain
amount of autonomy, and Shanghai’s municipal government imposed a tax of
5.55% on those reselling within one year.
of this year, Shanghai’s local government also implemented a new capital
gains tax on detached and semi-detached houses—the villa market. Based
on profit returns, it ranges between 30% and 60% if you sell within three
years of purchase. For properties sold between three and five years after
purchasing, the tax rate is halved. A property sold after five years is
has also doubled the property tax to 3% on luxury homes. These are
defined as homes in the city center costing more than $215 per square foot,
and larger than 1,400 square feet. For cheaper and less spacious apartments,
the previous rate of 1.5% remains unchanged.
citizens are now prohibited from taking out second loans before repaying
any first one. Interest rates were also raised to a minimum 5.51%.
There was also
initially a recommendation by the Bank of China to stop developers from
selling new projects in Shanghai off-plan. Although this was dropped, it
didn’t prevent developers from getting the jitters.
The Big Ownership Question
regarding ownership remain unchanged. China is a communist country; the
government owns all land on behalf of the people. Individuals cannot own
property on a freehold basis.
it’s an apartment or a villa, the best you can do is take out a 70-year
leasehold on a property. What happens when the 70 years are up? Your
guess is as good as mine—or that of anybody else involved in China’s property
market. Maybe China will follow Thailand’s example and extend leases, but
it’s impossible to say for sure. Current policy seems more about regulating
market prices rather than setting any long-term agenda.
Take Your Earplugs
Metropole Hotel seemed a good choice when I booked a double room for a
discounted $81 through www.hotels.com. (Shanghai hotels are expensive.)
Built in the Art Deco 1930s, it’s less than a 10-minute walk from the Bund’s
riverside promenade. Unfortunately, its sound-proofing is disastrous. The
cacophony of horn-blaring starts before first light. Bicyclists, peddlers
with handcarts, a tailback of cars heading toward People’s Square…each
frustrated driver seemed intent on making enough noise to wake an entire
neighborhood of ancestral spirits.
Useful Shanghai Online Resources