Throughout the previous five years of observing and reporting about the Shanghai apartment and housing market, 1 thing is sure. Shanghai real estate is past bubble. It is post-bubble. Or maybe we could even say that it’s bubble-proof. Together with the urbanization trend in effect, and with real estate and land holding the preferred investment for a middle class Chinese who do not have enough cash to shuffle into further afield or Hong Kong, Shanghai apartment market is the best property market around.
The living cost in Shanghai is going up. 1 thing is sure — property agencies do very well in the future with Shanghai property market because the Shanghai apartments rent is big business.
On Wednesday, international property consultancy DTZ/Cushman & Wakefield said that Shanghai in particular will probably maintain double-digit growth in trade volumes and value this year. Foreign investors aren’t far behind, although the principal buyers are mostly domestic.
One growing sector is in need for serviced apartments around Pudong district.
The report mentioned low funding costs in China (also in center economies like Japan) and also yuan depreciation expectations lending to worries that today is the opportunity to enter the marketplace before the money worth dives. The yuan is currency trading at 6.67, but consensus estimates have it compelling closer to 7 in the next six months.
The report also cited need by local insurance firms who demand challenging assets to hedge against low yielding fixed income. Insurance companies tend to invest in bonds. But when international bonds are yielding less than 3% and inflation is about 1% in China, that does not leave a lot of growth for carriers that wish to have assets that can cover account holder liabilities. Many U.S. cities are on the receiving end of China life insurance company property investments, such as properties in Boston as well as the famed Waldorf Astoria. The New York City hotel is now owned by China’s Anbang Insurance.
Of the $18 billion worth of property deals national investors sealed 76%. Investors are looking for income. Office buildings are the properties, accounting for almost 60% of the total by value this year sold, Cushman data revealed.