China cities at the peak of the largest real estate bubble in history

[Chris Coles]

Re: China cities at the peak of the largest real estate bubble in history

This colliers report says that Shanghai office vacancy is 5%.

http://www.colliers.com/en-gb/china/...-market-report

Of course, this is Shanghai where car license plates are sold for $10k and that is provided you win the lottery - only 1 out of 20 gets to win. Smaller cities won't be the same.

I was thinking about the people rather than the businesses; the occupancy of all those tower block, (presumably), apartments. We keep hearing about a building bubble where whole cities are empty, so I was more inclined to see if there were figures available to show how that pans out across the whole nation.

[touchring]

Re: China cities at the peak of the largest real estate bubble in history

I was thinking about the people rather than the businesses; the occupancy of all those tower block, (presumably), apartments. We keep hearing about a building bubble where whole cities are empty, so I was more inclined to see if there were figures available to show how that pans out across the whole nation.

When I was in Chengdu a year ago, I didn't see any unoccupied apartments, but I did see some new apartment blocks that looked out of place in a rural city some 3hrs car ride away, and which I suspect is not fully occupied.

Chengdu is a 2nd tier city but is located in the backward western part of China, bordering Tibet, and is ranked the 61th Chinese city in terms of GDP per capita - http://www.chinawhisper.com/top-100-...dp-per-capita/

I suppose that 1st tier cities such as Guangzhou and Shanghai would not have occupancy issues.

It's difficult for us to understand what's going on in China without actually visiting the cities.

The last time I was in Shanghai was more than 10 years ago, but based on my experience in Chengdu last year, a supposedly backward city, I can tell you that the most advanced cities in China like Shenzhen and Guangzhou are equal to, if not already more developed than Hong Kong and Singapore in certain respects.

Another issue is the size and diversity of the property market in China. Just Shanghai alone the market is as diverse as that of am medium sized country. Shanghai is 4 times the size of Greater London with 4 times the population. Land price could range from $2000 per sq ft that u could build
to maybe $2 per sq ft on the city fringes? This is how Disney can afford to build the world largest Disneyland theme park in Shanghai.

[Chris Coles]

Re: China cities at the peak of the largest real estate bubble in history

Thank you, very interesting.

[touchring]

Re: China cities at the peak of the largest real estate bubble in history

I noticed that a lot of posts were deleted from this thread for some strange reason, anyway, here's the latest news from Shenzhen, the wealthiest city in Mainland China.

http://www.forbes.com/sites/ywang/20.../#610f747d118d

Note: I hope this report won't be deleted since Forbes.com is MSM?

Burying the head in the sand won't stop things from happening around the world. It has been 2 years since I put up this biggest real estate bubble in the world thread. There's no peak to be seen yet and some cities like Shenzhen have visibly grown since 2014.

SEP 27, 2016 @ 05:03 AM

Is This The Most Expensive Apartment In China?

Yue Wang ,

FORBES STAFF

For years the southern city of Shenzhen has been famous for being China’s technology hub where you can find the headquarters of web giant Tencent and the country’s biggest smartphone maker Huawei. Lately, however Shenzhen is attracting attention for an entirely different reason: tiny apartments measuring six square meters priced at nearly 1 million yuan.
A local developer named Shahe Shiye has built 11 such mini-homes making up a 15-storey residential property project which is supposed to have a total of 169 apartments in the city’s Nanshan district. The tiny flats, dubbed “pigeon cage apartments” because of their small size, are equipped with bathrooms, kitchens, wardrobes and fold-down beds. These flats each costs 880,000 yuan ($132,000), or $22,000 per square meter. Larger apartments are available, ranging from 36 to 60 square meters.
A local property developer in the Chinese tech hub of Shenzhen is selling flats as small as 6 square meters. (AP Photo/Kin Cheung)

The sale of the tiny homes went viral on social media over the past few days. Those who saw the pictures of these apartments online were shocked by the cost, two and half times more than Shenzhen’s average per square meter. It is also higher than the average homes in China’s capital Beijing.

A screenshot of a user’s social media post of the tiny apartments in Shenzhen.

In Shenzhen, the average cost of a home rose 63% in the first quarter this year from the end of 2015 – the highest growth rate worldwide followed by Shanghai’s 30.5% and Nanjing’s 17.8%, according to property consultancy Knight Frank. Now a home in the city costs almost 60,000 yuan ($8,978) per square meter, making it one of the most expensive property markets in China, according to data from the country’s Urban Planning, Land and Resources Commission. Monthly income in the city, by comparison, increased only 10% in the same period from a year ago to 13,283 ($1,988) yuan, according to the National Bureau of Statistics.

“The tiny homes are just crazy,” user Youko wrote on China’s Twitter-equivalent Sina Weibo. “We are forced to live like rats in such small flats,” another user Mumuxixiaotu wrote.

Property Prices In Developed Chinese Cities In August
	Beijing	Shanghai	Shenzhen	Guangzhou
yuan per square meter	50,136	48,009	54,478	21,270
Source:property agencies Sofun and Anjuke

Still, several eager buyers snapped up the mini homes, according to the Shenzhen branch of the national land commission. To maximize profits, local property developers experimented with the tiny apartments as a result of diminishing land supply. It’s also attractive to buyers because they don’t have to scramble for down payments required by larger flats, says Yan Yuejin, a research director at Shanghai-based consultancy E-House. Shenzhen requires first-time home buyers to make a down payment of 30%, while the number rises to 70% for second home purchases.
“Property prices are rising so fast in the city,” Yan says. “Buying smaller flats help people save up when it comes to down payments. But these ‘pigeon cage apartments’ are an extreme phenomenon.”
Smaller properties may represent a trend in China, Yan says. In expensive metropolises such as Beijing and Shanghai, there can be a rise of small homes equipped with just beds and communal bathrooms in public areas, he says.
Following reports of the sale of these tiny homes, local authorities ordered the contracted seller Zhongzhi Investment to suspend their sales, according to a notice posted on the official Weibo account of the Shenzhen land commission. The tiny apartments weren’t the same as described in the final land planning papers submitted to the commission, according to the notice.
China also requires residential homes to be at least 22 square meters. Shenzhen authorities didn’t mention the rule as a reason for the ban. A person who answered the phone at Zhongzhi said she knew nothing about the situation and declined to transfer the call.

Here's an opinion from a HK source that provides some explanation on the phenomenon.

The part on Shenzhen having a permanent population of 21 million, so is it 21 million permanent + xx million without the permanent residence pass?

This will make Shenzhen the most populated proper city in the world - not metro.

http://www.ejinsight.com/20160927-wh...r-in-shenzhen/

While the expensive pricing reflects a bubbly China property market to some extent, it also highlights the extremely high population density in Shenzhen.
Shenzhen has a permanent population of 21 million, three times that of Hong Kong, but the city only has an area of 1,948 square kilometers, versus Hong Kong’s 1,103 square kilometers.
Shenzhen has a population density of 10,800 persons per square kilometer, far above the 6,500 in Hong Kong, 3,800 in Shanghai, 1,740 in Guangzhou and 1,310 in Beijing.
As a special economic zone, Shenzhen can’t expand like most other mainland cities and is therefore faced with a serious shortage of fresh land supply.
Meanwhile, the fast developing internet and tech sector in Shenzhen, led by giants like Tencent, Huawei, Zhongxing and BYD, serves as a strong magnet to draw a large number of young workers to the city, exacerbating the housing shortage.
The mini apartments may not be ideal homes for families, but they fit in nicely with the budget and accommodation needs of the young, single workers coming from other parts of China.