Shanghai Real Estate market

Shanghai (Chinese: 上海; Pinyin: Shànghǎi; Shanghainese: /zɑ̃'he/; abbreviation: 沪; nickname: 申), situated on the banks of the Yangtze River Delta in East China, is the largest city of the People's Republic of China and the eighth largest in the world.[4] Widely regarded as the citadel of China's modern economy, the city also serves as one of the nation's most important cultural, commercial, financial, industrial and communications centers. Administratively, Shanghai is a municipality of the People's Republic of China that has province-level status. Shanghai is also one of the world's busiest ports, and became the largest cargo port in the world in 2005.
Originally a fishing town, Shanghai became China's most important city by the twentieth century and was the center of popular culture, intellectual discourse and political intrigue during the Republic of China era. After the communist takeover in 1949, Shanghai languished due to heavy central government taxation and cessation of foreign investment, and had many of its supposedly "bourgeois" elements purged. Following the central government's authorization of market-economic redevelopment of Shanghai in 1992, Shanghai has now surpassed early-starters Shenzhen and Guangzhou, and has since led China's economic growth. Some challenges remain for Shanghai at the beginning of the 21st century, as the city struggles to cope with increased worker migration, a huge wealth gap, and environmental degradation. Despite these challenges, Shanghai's skyscrapers and modern lifestyle are often seen as representing China's recent economic development.

Saturday, January 12, 2008

China - Shanghai Property Investment - The Paris of the East

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China and specifically Shanghai is one of Property Frontiers' most exciting regions from a property investment perspective. For your first investment opportunity in China please visit our Plaza Hyundai page.

Although Beijing is the capital and seat of government, Shanghai is the commercial hub of the country and is more open and westernised due to its long heritage of international trade and European influence meaning that you are more likely to see good returns in capital appreciation and rental income.

Shanghai translated means "on the sea". Standing on the mouth of the Yangtze River, it has a population of over 15 million with a large number of expatriates from around the world giving it a unique contrast. The old Chinese houses nestle side by side with grand colonial architecture and the soaring skyscrapers that have earned the city the name of "China's New York" - but considerably cheaper.

You will be able to find investment property starting from 16,000 RMB (~£1000) per square meter on the outskirts of the city but should expect to pay around 25,000 + RMB (~£1600+) per square metre for property in a good loaction near Pudong or Puxi.

For more information, or to find out whether Shanghai is right for you, please contact one of our agents on +44 (0)1865 202700 or email info@propertyfrontiers.com

Why invest in Shanghai?

From Nanjing road with its vast array of shops and the cities restaurants to the the famous Bund and to Pudong (the new finance and business areas), Shanghai offers a number of benefits for the savvy investor but why should you be interested in investing in Property in Shanghai?

  • With its GDP averaging 9.5% since 1978, China has the fastest growing economy in the world
  • Until July 2005 the Chinese currency was pegged to the dollar and was estimated to be around 20-40% undervalued. At this point the Chinese government decided to de-peg the currency and peg it instead to a basket of currencies, freeing it to appreciate. This means that all Chinese assets will see an increase in value over the next few years, and creates an opportunity for gain through investment in the country. Since the currency was de-pegged it has already appreciated by 3%, and although the Chinese government is holding the appreciation back to protect the economy, further rises are likely in the near future, and investor interest in China has surged as a result.
  • Following its accession to the World Trade Organisaion, China is now set to become the leader of the global economy. Shanghai already provides 1/3 of China's taxes, through its immense business industry, and so as China leads the global economy Shanghai will be at the centre.
  • Property prices in Shanghai are currently one third of other global centres such as London, Tokyo, New York and Hong Kong, therefore capital appreciation is set to be huge over the medium to long term. It is already the fastest growing city in the world, attracting large amounts of foreign direct investment every year. Capital growth increased from 15% in 2002, to 25.5% in 2003, and stabilised at 19% in 2004.
  • Shanghai is becoming an increasingly cosmopolitan city and due to the strength of the economy there is a large and increasing amount of local wealth. Large and exclusive department stores and Gucci, Prada and Armani boutiques line the streets next to Rolls Royce and Ferrari showrooms.
  • Shanghai will receive worldwide attention when it hosts parts of the Olympics in 2008. the World Expo in 2010 and Disney and Universal Studios open in the city. Some of you may have also noticed the famous brand new race track which hosts the Chinese Formula One Grand Prix every year.
  • Friendly, educated and well-mannered, the Chinese are very welcoming to foreigners
  • Shanghai is a very safe city with an extremely low crime rate by Western standards and build quality and furnishings is all built to high Western standards.
  • Shanghai is the 'gateway to china' and Chinese government encourages foreign investment.
  • Real estate is viewed by authorities as a 'key investment goal '
  • Increase in population from native and foreign inflow creates a demand for residential property that outstrips the supply, keeping prices rising
  • Large international corporations such as CitiBank and Philips are relocating their Asia-Pacific headquarters from Hong Kong to Shanghai
  • Many of the apartments that Property Frontiers recommend to investors are fully serviced and offer guaranteed rental returns of between 5-12% over 3-18 years.

Interested to learn more? - Contact us for more information

Property Costs:

As Puxi has commercial, industrial and historical interests already established, the area is more desirable and therefore more expensive than newer areas such as Pudong. Prices range from RMB 21000/sqm for a standard serviced apartment through to RMB 27000/sqm for a high-end furnished serviced apartment with facilities, resulting in prices from £84,000 for a 55sqm studio off plan serviced apartment.

With last years incredible growth of the property market, the Chinese government implemented a variety of measures to dampen the market in the short term such as increase capital gains tax. Bearing in mind that private property ownership has only existed in China for a handful of years, the Chinese government are being very cautious about controlling all growth, and with prices in central Shanghai still a third of other global financial centres, these may be unwelcome in the short-term but are actually very sensible moves. Please be aware that the housing market in general in China is still so young and new that all factors, such as the CGT, will most likely change as they adopt more european property models.

For example, also at the moment the mortgage market is not advanced such as in the UK. You will only be able to acquire 60% finance at the best of times over a shorter repayment term, and there are no interest-only mortgages at present. Again, this should change as Banks in China are given more freedom. At the moment however, to invest in China, you do need to consider to have at least 40% of the purchase price available as a deposit.

For the purchase process, attorneys in China will be provided to manage the conveyancy procedure, for which you also need to budget between 4-5% of the purchase price to cover Stamp Duty, all fees and other taxes/duties.

For full information on purchasing a property in Shanghai, please contact us for more information or complete our online form

Posted by Unknown at 09:33