Vanke offers festival house discounts of 5%

China Vanke Co Ltd, the country's largest publicly listed real estate developer, is planning to launch big sales promotions in Shanghai on Thursday, the company said.

The Shenzhen-based company, China's biggest residential property developer, will offer discounts of as much as five percent to local home buyers on Thursday, the Lantern Festival, following similar promotions in other Chinese cities, including Guangzhou and Shenzhen.

Buyers who sign home purchase agreements with the company on that day can gain the largest discounts Vanke has offered in Shanghai since 2007, industry people said.

About 10 Vanke projects on sale - including residential and commercial properties - will be open for the promotions, the company said.

The company said it would likely offer the discounts annually in the future to reward clients, according to media reports.

Vanke is among the first developers to launch sales offers after China's real-estate market cooled in response to the central government tightening lending.

For example, in January, a Vanke residential project in Chengdu, Sichuan Province, was sold at between 4,500 yuan (US$626) and 4,600 yuan per square meter, much lower than the asking price of more than 6,000 yuan two months earlier in the same area.

Wang Shi, chairman of Vanke, said that price cuts were the company's response to a changing market.

As the country's leading residential property developer, Vanke's price cuts may trigger similar approaches by other developers, industry analysts said. "It is often the case that price cut promotions launched by one developer, especially big companies, in one area will probably be followed by its counterparts due to intensive competition among real estate companies," said Fan Weiguo, deputy general manager with Shanghai Hanyu Property Agency Ltd. "That is the so-called chain reaction scenario frequently seen in the real estate industry."

In Guangzhou, for instance, China Merchants Property Development Co and Gemdale Group, two major real estate developers in the country, have already launched similar promotions following Vanke.

Statistics show that sales of new homes dropped for the fourth consecutive month in January in Shanghai as more buyers are taking a wait-and-see attitude after the government stepped in to tackle soaring home prices.

http://www.shanghaidaily.com/sp/article/2008/200802/20080218/article_349027.htm

Government links with developer

SHANGHAI Putuo District Government joined forces with a world leading property services provider yesterday to establish a strategic partnership as part of its efforts to accelerate real estate development in the district.

Under an agreement signed yesterday between the district government and Colliers International, the property developer will serve as an international strategic consultant for the local government and offer all-round property solutions which will include comprehensive development planning, real estate promotions for overseas investors and tenants and professional property management services.

The strategic partnership, probably the first of its kind in the city between a district government and an international property consultancy firm, could be a win-win deal.

"With a successful track record and nearly 20 years' operating experience in the Chinese market, Colliers is expected to help attract more international investors and multinational cooperations to either invest or build their centers here in the district," said Lu Nanting, director of Putuo Investment Service Office. "Moreover, we believe Colliers' extensive network and resources around the globe may also be of great help."

Colliers, which entered the China market early in 1989 and now manages properties in more than 60 cities across the nation, sees Putuo as the most promising district for new CBDs to emerge, aside from the traditional zones.

http://www.shanghaidaily.com/sp/article/2008/200802/20080221/article_349422.htm

Shares to fund projects

CHINA Merchants Property Development Co Ltd, a major publicly listed real estate developer in the country, said yesterday it plans to raise as much as 8 billion yuan (US$1.1 billion) through a new share sale, mainly to fund 14 projects in six mainland cities including land acquisition and property development.

The 14 projects, mainly residential ones as well as some office and industrial developments, will need a total invesment of about 17.1 billion yuan, the Shenzhen-based company said in a filing to the Shenzhen stock exchange yesterday.

Eight of the projects are located in Shenzhen, two in Shanghai and one each in the cities of Tianjin, Chongqing, Suzhou and Zhuhai.

"The new share sale plan will certainly help CMPD further expand its presence in the country's property market," said Xue Hebin, a real estate industry analyst at Orient Securities Co.

"We believe the company, which now develops real estate projects in 12 cities nationwide, will be able to maintain its fast-growing pace in the coming 2008," said Xue.

According to the annual report released by CMPD yesterday, net profit soared 83.38 percent to 1.158 billion yuan last year amid strong sales growth.

Twelve-months sales of residential properties reached 2.628 billion yuan, a year-on-year increase of 81 percent.

In addition, revenues from leasing properties rose 25 percent to 383 million yuan in the report period and gains from brokerage services jumped 71 percent to 103 million yuan, the report said.

China's real estate developers, no matter big or small, are facing stringent capital flows as the country's lenders are all tightening their credit controls to prevent the economy from overheating.

Continuous increases in benchmark lending rates and reserve requirement ratio required by the central bank has made borrowing costs higher and financing more difficult for domestic developers.

In 2007 alone, the People's Bank of China raised its interest rates on lending six times and asked banks on ten occasions to put more money aside to cover lending.

http://www.shanghaidaily.com/sp/article/2008/200802/20080221/article_349420.htm

Hong Kong has most expensive office space in Asia

HONG Kong has overtaken Tokyo with the most expensive office occupancy costs within the Asia Pacific region, or the second-highest in the world, while Shanghai holds 24th place on this year's list being the most expensive location on the Chinese mainland, the latest global report on office occupancy costs by Cushman & Wakefield has found.

According to the 2008 edition of Office Space Across the World released today by the global real estate services provider, London retains its title as having the most expensive office occupancy costs around the globe, with prime space in London's West End now at US$9.32 per square meter per day, a 30 percent increase from a year earlier in local currency terms.

Hong Kong, the new runner-up, has recorded a 40 percent year-on-year increase with prime office rental currently standing at US$7.13 per square meter per day, while in Shanghai, rental for prime office spaces is set at US$2.06 per square meter a day, the report said.

``With the expansion of the financial services sector the demand for office space grew significantly in Hong Kong in 2007 with rental levels advancing by almost 40 percent in the Central (CBD) submarket, and with limited new supply expected for 2008, it is expected that rents will continue to grow," explained Richard Middleton, executive managing director of Cushman & Wakefield's China operation.

``Meanwhile, the Chinese mainland market delivered a more steady performance, compared to Hong Kong, with rents growing an average 5 percent over the year.''

In particular, Beijing saw a significant amount of new supply of Grade A space so that rental growth has been marginal while Shanghai on the other hand has seen an increase of 10 percent in rentals from last year.

``Overall, China should continue to see steady growth in 2008 mainly due to the strong domestic economy and also because of continued improvements in infrastructure such as in the case of Beijing with the upcoming Olympics Games,'' Middleton added.

Overall, the Asia Pacific region recorded exceptional rental growth in 2007 rising an average of 25 percent, a significant increase as compared to the 10 percent growth in 2006. Among the region, Singapore revealed itself to be the fastest regional riser in 2007 with rents increasing by 78 percent in the CBD characterized by high demand and tight supply.

http://www.shanghaidaily.com/sp/article/2008/200802/20080222/article_349646.htm

Shanghai Real Estate Market

There's plenty of kinds of real estate housing in Shanghai, but there is no longer the excess of real estate that their once was. Prices are finally on the rise, but still a lot cheaper than anything you'd get back home.

Here is a rough guide to the types of real estate housing available:

Expat Communities/Villas: They can be expensive, but they can feature gardens, split-level living, garages, full amenities and a health club somewhere close by. You will pay handsomely for this luxury. Most of the villa developments are in the Hongqiao and Gubei areas to the west of the city center. Two big ones, Tomson Golf Villa and Shanghai Links are in Pudong.

Old Villas: Much more classy, generally in the old French concession area. These are residences dating from before the Communist takeover in 1949. The Shanghailanders sure knew how to live in style. For old houses which have been properly renovated, with electrical and plumbing updated, prices can be high, but the location is great and comfort guaranteed. For those that haven't been renovated ... expect problems amidst the grandeur.

Expat Apartments: These range from luxurious to nice, and from downtown to Pudong, with prices varying accordingly.

Living with the Chinese: This is the cheapest way to go, and more and more foreigners are turning to this option. Many real estate agents are now able to provide an interpreter, though if language is a problem, you might want to bring a long a Chinese speaking friend..

Shanghai: What Real Estate Bubble?

More and more big-name investors are buying up commercial properties

Property speculation is the hottest topic in Shanghai. From the cafés along the city's famous Bund riverfront to the karaoke joints of the Xujiahui entertainment district to the laundry rooms in the massive apartment blocs on the city's southernmost fringe, one question is on the tip of everyone's tongue: Is a bubble developing in the real estate market?

It's a reasonable point to ponder in a city where the price of residential property has risen nearly 20% over the past 12 months. But judging from the flurry of deals being done by some of the world's most sophisticated global investors, clearly not everyone thinks the boom has peaked. Morgan Stanley Real Estate Funds teamed with local developer Shanghai Yongye Enterprise Group and two Singaporean partners in June, 2003, to pony up $90 million for a high-end apartment complex in downtown Shanghai called Jinlin Tiandi. In January, Macquarie Global Property Advisors of Australia paid $98 million to buy 95% of Xin Mao Tower, a 20-floor luxury office building. And in April, developer CapitaLand Ltd. of Singapore announced that Goldman, Sachs & Co.'s (GS ) real estate division, Whitehall Funds, had paid it $107.6 million for Pidemco Tower, a 24-story commercial building in Shanghai's central business district. "The fundamentals in commercial property in Shanghai are very positive," says James Quille, CEO of Macquarie Global Property Advisers in Hong Kong. "And there is a well-trodden path in terms of how capital is structured and repatriated."

Unlike hot-money investors rushing in -- and out -- of emerging markets in search of a quick return, these white-shoe institutions say they're taking a longer-term view of Shanghai's real estate market. They aim to earn steady returns of 16% to 18% from rental income for their investors, which include pension funds and insurance companies. A handful of big names are already in the market. Other real estate funds looking at Shanghai property are sponsored by Deutsche Bank (DB ) and CSFB (CSR ). "Everybody is knock- ing on our door looking at deals," says Walker J. Wallace, partner at O'Melveny & Myer LLP's Shanghai law office.

The funds say that since they are investing mostly in commercial and retail properties, where the market is less frothy, the risk of a downturn is low. In fact, prices for top office buildings have only increased about 5% in the past 24 months, according to global property consultants Jones Lang LaSalle. Even if the market weakens in the next few years, these funds say they have a 5- to 10-year horizon. That of course assumes prolonged economic and political stability. Even the real estate investors acknowledge that in China's volatile market, anything can happen.

Shanghai's real estate prices fall significantly with close to 50% drop in some areas -claim

Shanghai's real estate prices fall significantly with close to 50% drop in some areas -claim

Shanghai. June 16, 2005. INTERFAX-CHINA -Property prices have dropped in Shanghai, the most active property market in China, as government measures such as raising taxes and restrictions on sales begin to be felt.

Statistics compiled by an official website show that last week (May 31-June 6) prices for Shanghai residential properties were down an average 18.5% to RMB 6228 (USD 752.17) a square meter from the previous week..

The statistics are compiled by eHomeday (www.ehomeday.com), the official website registering Shanghai's property market transactions. The biggest fall in residential sales was in Pudong New Area, which registered an average decline of 49.3% in the week. Meanwhile, the number of transactions have increased to 1.3% with 2516 properties changing hands in the week, with low-and-mid-end properties enjoying increasing popularity.

"The downtown area has seen a fall in prices, while the prices of properties in outskirts have increased recently," Ms. Huang, an official with eHomeday, told Interfax.

Image: Night Scene in Shanghai's Pudong New Area

Shanghai's combined index for housing prices rose by 1.1% percent to 1,513 points in May. Sales of used homes rose in mid and late May, as both buyers and sellers hurried to make deals before June 1, the deadline for new government policies to come into effect. Measures were announced last month by seven key ministries and government authorities including the People's Bank of China and Ministry of Construction to cool off the real estate market. According to the measures, property owners who sell within two years of purchase will have to pay tax on the full sale price. The measures were mostly to prevent speculators investing in property, which artificially raised the overall market price, especially causing difficulties for mid to low income families.

Several real estate agents and research centers, including eHomeday, Centaline (China) Property Research Center and the Shanghai Index for Housing prices Office, however, declined to speculate on the future prospects of the Shanghai property market, saying it is a too sensitive a topic to talk about at the moment.

Shanghai Real Estate Analysis

"I believe the property prices will remain fluctuating within a narrow band, and no dramatic drop will occur, at least not this year," a property analyst, who wished to remain anonymous, told Interfax.

The real-estate market, especially in Shanghai, is a very sensitive area currently. Both local media and officials are following government guidelines in not causing 'market disorder.' This means they cannot offer official comment other than that specified by the government. Shanghai is especially sensitive as a property bubble has built up, following rampant speculation in housing. The government hopes to cool the market following its recent measures, though many market observers are not convinced the measures will work. Property prices in Shanghai have risen by more than 200% over the recent 2 year period. The speculation is compounded by the long-term slump in the stock market.

China puts brake on Shanghai's real estate boom
06/25/2005 (Asahi Shimbun)

SHANGHAI-Property values were soaring and the real estate market here was booming-until this spring, when the Chinese government started to fear a bust.

Worried that the runaway market could lead to an asset-inflated bubble economy, the government began to introduce measures to curb the rise in real estate prices.

One of the dampening measures includes the imposition of taxes on profit from the quick resale of real estate.

Those hardest hit by the new rules are mostly middle-class investors who rushed to buy condominiums at the peak of the boom.

A 26-year-old woman who works at a foreign firm in the city

says she is so worried about the market situation she cannot concentrate on her job. She doesn't know if she can resell her condo or if she will be plunged into serious debt.

The woman, who gave her name only as Zhu, receives several e-mail messages daily from a real estate agent. Mostly, it's bad news, such as: The market price for condominiums fell by 20 percent in one month.

In March, Zhu bought a unit in a multistory condo under construction in a residential area about a 30 minute-drive from the city center. The 135-square-meter unit was priced at 1.31 million yuan (about 17 million yen).

She put down an 860,000-yuan deposit. To make the payment, she used 150,000 yuan from her savings and borrowed 710,000 yuan from a bank on a 30-year loan. Zhu said the bank gave her the loan after only briefly researching her financial records.

Zhu earns 7,000 yuan monthly, which is relatively high in China for people of her generation. Of the 7,000 yuan, however, 5,400 yuan goes to repay the loan, she said.

Zhu now refrains from going out or dining with friends. She doesn't buy cosmetics, clothes or cigarettes.

This is Zhu's second go-around in the real estate market; the first time was much more profitable.

In October 2003, right after landing her job, she purchased a 38-square-meter condo for 240,000 yuan, planning to live in it. In December 2004, she resold it for 350,000 yuan. The profit lured her back into the real estate market.

Zhu said she did not intend to live in the new 135-square-meter condo when she bought it. Her plan was to resell the condo once it was built, pay off the loan and earn a hefty profit.

Now, Zhu is worried about whether she will break even.

Not only entrepreneurs, but also many individuals like Zhu, have embarked in real estate investment in Shanghai.

Some investors buy entire buildings and resell them shortly after.

The total market for real estate in Shanghai in 2004 reached 226.3 billion yuan, up 60 percent from the previous year.

According to the Shanghai city government, the average housing price increased by 15.8 percent in one year. In the central part of the city, the rise was a spectacular 27 percent.

This spring, however, the central government, which had been encouraging real estate investment, began to take action to curb property speculation, not just in Shanghai, but also in other major cities.

The government clearly wanted to avoid a collapse of the real-estate bubble, with investors unable to pay bank debts, leaving banks with huge amounts of bad loans.

In a government report released in March, Chinese Premier Wen Jiabao said: "Both an overheated or cooled-down economy is disadvantageous. The government will put the brakes on the rise in real estate prices."

Shanghai is also following the central government's move.

In March, the city government began to impose a 5-percent tax on profits when investors resell real estate within a year after purchase.

In April, the city government prohibited its citizens from taking out a second loan before repaying the first one.

Meanwhile, the People's Bank of China raised housing loan interest rates in March. The lowest interest rate for loans of five or more years was raised 0.2 percentage point to 5.51 percent.

The bank also set the minimum down payment for real estate at 30 percent, up from 20 percent.

On June 1, the central government introduced a 5-percent tax on profits for investors nationwide who resell real estate within two years of purchase.

With all those dampers, a wait-and-see mood in the real estate market has spread.

According to ehomeday.com, the largest housing information Web site in Shanghai, the price per square meter for a new condominium in a city suburb declined from 17,000 yuan in March to 14,000 yuan in April and to less than 13,000 yuan in May.

The price for a condo in the Pudong district, which is known for its high-rise buildings, dropped 17 percent in the two-month period.

The market price for conventional condos in the city is on a downward trend with huge fluctuations. The average square-meter price for a condo dropped sharply from 10,000 yuan in April to 5,500 yuan on May 24. That was the lowest recorded this year.

However, some experts said a drastic decline in real estate prices is unlikely to continue.

Zhu Zhendong, an adviser to Shanghai Yijie, a real estate firm with wealthy clients, said: "The central government introduced the measures to prevent those without enough funds from embarking in real estate speculation. Wealthy people are not affected by them."

Most of the firm's clients, who are investors based in Taiwan and Hong Kong, are optimistic, expecting a rise in their property values by a possible higher appreciation of the Chinese yuan against the U.S. dollar.

Xiao Minjie, a senior researcher at the Shanghai office of Tokyo-based Daiwa Institute of Research Ltd., said, "The real estate investment boom will come back again after a three-month wait-and-see period."