New Shanghai Apartment

I heard a rather disturbing story on NPR's Morning Edition while in the shower this morning.Here is an excerpt of the transcript from National Public Radio (note, the radio version can be heard here):

New figures show that property sales in China jumped 75 percent last year as record levels of bank loans boosted purchases. Property prices rose by the fastest pace in 18 months in December, adding to fears of a real estate bubble. China has been trying to rein in speculation.

One of the places with the fastest rise in prices is Shanghai. A new Shanghai apartment now costs 68 percent more than it did a year ago, according to Knight Frank, a commercial and residential property agency.

In many other Chinese cities, prices rose by 40 percent, the agency says. Now, ordinary people fear they are being priced out of the market, while the luxury sector is soaring."Last year, one of my customers arrived in a BMW, lugging two suitcases. Each suitcase contained the equivalent of about $70,000. He said, 'I've brought this money to buy a villa,' " recalls James Zhuo, a property agent for Century 21 who works in Lujiazui, one of Shanghai's most expensive areas.The coal-mine millionaire from the inland province of Shaanxi was the type of customer who was buying in 2009, Zhuo says.68% in one year?! Even (the relatively modest) 40% thoughout the rest of China is insanity. This kind of rapid growth even puts the early 2000's US bubble to shame.This article does a good job in highlighting how Chinese cities are already absorbing a massive amount of people flowing in from the Chinese countryside. That migration will surely raise demand for apartments in Chinese cities. That is an unprecedentedly large amount of people who'll be coming into the Chinese real estate market in the coming decades.While saying that, so much of the growth highlighted in the article appears to be fueled by luxury Shanghai apartments growth. Obviously, rural migrants aren't going to be adding to demand for those kinds of apartments.

To me, any investment or commodity or anything that grows 68% or 40% (or even an amount significantly less than these numbers) is shaky. It screams ponzi scheme or some other kind of predatory sucker operation.And usually, those kinds of schemes end up doing something like this:

The above photo is of a collapsed apartment building under construction in Shanghai this past summer.I really want China to avoid anything remotely close to what is going on in the US. Sure, Chinese people alive today have seen things much, much worse than anything going on in America right now. But things here in the US are bad. While things are going well for Qian and me on a personal level, the US as a whole is very sick. I hope China can learn from our mistakes.

Talk about Shanghai apartments

I bought a two-bedroom Shanghai apartment in Lujiazui, the trade and financial district in Pudong.

The RegaliaI bought it in 1994. I was one of those naive Singaporeans who thought money could be made in China's red-hot property market. We were wrong....so very wrong! Many of us ended up without even seeing a brick on the Shanghai apartment site, and worse ... losing every dollar that was invested! I was one of the luckier ones who finally managed to sell off my apartment after about 12 years and get back the capital. But if I included the costs of spending months fighting for the title deed and the return of stamp fee the developer had overcharged us (about Sing $10,000), and the many problems with the developer, the management office, rental agents and tenants, then my little venture into China property market was a big mistake.

When Deng Xiaoping was in charge, China opened its door wider and welcomed foreign investments. And building luxury condos and commercial buildings and selling them to foreigners was one sure way of attracting foreign funds into China. So property developers in China and Hong Kong joined forces and easily acquired lands in cities like Beijing, Shanghai and Guangzhou to build condos and commercial Shanghai apartments for foreign investors. Most of these property developers from Hong Kong and China had very ambitious plans, so ambitious that they threw all cautions aside. Many did not deal only with one or two projects at one time. Without much control by the govt on land acquisition and bank loan approvals, they just went ahead with several building projects all at one go. Reason? If they could make tons of money by borrowing money easily from the banks and if there were a lot of ready buyers, especially from wealthy overseas Chinese, why not?

Singapore in the 90s was doing very well economically and its citizens were eager to invest their money in properties; but as the costs of buying properties in Singapore escalated, they looked for properties elsewhere, such as Malaysia, Australia and China. Of course, the property developers overseas could somehow smell our Singaporean money. So they came to exhibit their "wares". On weekends you could see many of them displaying their project plans and distributing glossy brochures in exhibition halls and 5-star hotels. And Singaporeans, flushed with money, came in droves to see the exhibitions. They were impressed by the project plans and the building models on display. Moreover, compared with the houses in Singapore, they were so very cheap, cheap, cheap! Of course, "kiasu" Singaporeans were afraid to lose out to others; so they came in large numbers and queued up to buy.

Shanghai apartments for renting: Modern Shanghai apartment made charming

Shanghai apartments for renting: Modern Shanghai apartment made charming: HAVING lived in an old, renovated apartment on Tai’an Road for more than five years, BJ Macatulad and Jeremy Young decided to move into a mo...

Modern Shanghai apartment made charming

HAVING lived in an old, renovated apartment on Tai’an Road for more than five years, BJ Macatulad and Jeremy Young decided to move into a modern apartment in 2011 to begin a new phase of life in Shanghai.

“We love the character of these old buildings but they are just like vintage cars — gorgeous to look at, but they often break down and do not provide modern, practical conveniences,” Macatulad said.

After several years of putting up with freezing winters, bursting pipes, weak water pressure ... the couple finally decided it was time to move on. “We traded the vintage car for a reliable (albeit plain) new compact car, so to speak.”

However, the couple was reluctant to give up the charms of an older apartment, so they really wanted a new place that still had some personality. “Most of the apartments in the new high-rises are really stiflingly bland with few interesting elements, and I think I could not have stayed in those places very long,” Macatulad said. “What attracted me to this apartment in Central Residence, apart from the fact it was just renovated and in excellent condition, is the balcony’s charming views over the trees of the former French concession area, and beyond it, the iconic buildings of Xujiahui.”

The greenery reminds Macatulad, who is from the Philippines, of their old place with its wide windows shaded by plane trees. Her husband, Young, from New Zealand, also likes that there is an extra half-room enclosed by floor-to-ceiling glass doors, which serves as his private office.

The apartment was in great condition so no structural changes were needed. Since they've amassed a lot of furniture over the years, they needed for the space to be totally unfurnished so that they could put their own stamp on it. The couple did spend a lot of effort in decorating so it would still feel warm and evoke some of the charm of their prior homes in older Shanghai apartments.

As always, they like to mix styles, periods and influences. They have modern pieces alongside antiques, Asian-influenced accents alongside Western-style furniture, sleek surfaces with some natural textures and materials mixed in.

“As for the overall feel, we were going for something relaxed and unfussy, but still refined — a place where we could have grown-up dinner parties but where everyone felt comfortable putting their feet up on the furniture,” Macatulad said. “I really think everyday decor needs to be livable and comfortable first and foremost. I could never have a ‘show house’ where people felt uncomfortable touching anything!”