On hunt for the Asian rental houses: Shanghai

Over the previous five decades of observing and reporting on the Shanghai apartment and home market, 1 thing is certain. Shanghai property is past bubble. It is post-bubble. Or maybe even bubble-proof, I would say. With the urbanization trend in effect, also with land and real estate holding the preferred investment for a developing middle class who don’t have sufficient cash to shuffle into farther afield or into Hong Kong apartment market, China housing is the hottest real estate business right now.

shanghai luxury apartment

Shanghai is Asia’s London and New York when it comes to leasing flats.  Additionally, the living cost in Shanghai is continually going up. 1 thing is certain — property agencies do well in the near future with Shanghai apartment market.

On Wednesday, global land consultancy DTZ/Cushman & Wakefield stated that Shanghai in particular will likely maintain double-digit growth in transaction volume and value this year. Foreign investors are not far behind, although the buyers are domestic.

Property investment deals, excluding property sales, are focused to total $70 billion in Shanghai in 2017, a 20 percent increase in about $58 billion last year, according to a report by Wakefield.  One sector is demand for serviced apartments around Pudong financial district.

The report mentioned reduced capital costs in China (and in center markets like Japan) and yuan depreciation expectations lending to worries that today is the opportunity to enter the marketplace before the currency value dives. The yuan is money trading in 6.67, however, consensus estimates have it pushing closer to 7 at the subsequent six months.

Insurance companies tend to invest in bonds. But inflation is around 1% in China and when bonds are yielding less than 3%, that doesn’t leave a lot of growth for insurers who wish to have assets that could 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 and the famous Waldorf Astoria.  China’s Anbang Insurance now owns the New York City hotel.

In Shanghai, Chinese individuals still play the dominant role in the market.  Of the $18 billion worth of property deals completed from the first six months of the year, 76 percent were sealed by investors.

Investors are looking for income. Office buildings are the properties, accounting for almost 60% of the total by value sold this season, Cushman data showed.