Real estate is Shanghai has been one of the most consistent topics of conversations in Shanghai for all of my time here. Lately, the market has been on fire as real estate agencies that were culled 2 years ago are now back in full force (I suspect the tanking equity market is driving flight to real estate assets), and prices are on the way up..

Over the last three weeks though, and after 4 years in the same flat, I began a search to find a new apartment and once again I was reminded of just what a game the rental market is.

Before I get started, I should metion that I have done this before.. that I have a pretty strong knowledge of the local market (where I want to live and what going rates are).. and my girlfriend can pretty much name off the pricing of any compound inside the inner ring road.

Add that together, add 3 real estate agents running in parallel, and you have the ingredients for a marathon of apartment viewings. This time around, my girlfriend and I were focused. We were looking at a particular area of town, near the subway, and of the 10 compounds in the area we knew from dinner parties and coffee talk - we knew 3 of them were off limits, 3 were high targets, and the other 4 we would only consider if there was a cut throat deal involved.

Before we got started in this process we knew a few things to be certain:

1) With the Olympics approaching, those who were coming for the Olympics were already here and so there were not a lot of people looking to rent
2) Unlike previous years, there was plenty of new stock on the market that was attractive. Zhongshan park has grown significantly, Pudong, villa compounds.. all have diluted what used to be a highly concentrated market
3) With many firms localizing employees, housing allowances for many single halfpats has been reduced, making 3br apartments too expensive
4) With a lot of new villa compounds hitting the market, spending 3-4k USD on a flat is also not as attractive as it used to be
5) Many of the apartments in the area we were looking at were starting to decline as they have hit the 5-8 year age range
6) No one knew what was going to happen after Olympics, but we are all sensing that at the very least there will be a 5-10% reduction in expats in China who are just here for the big show

So… with that we began the marathon….

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Last year while enduring a jack hammer educed headache I wrote a post entitled Nanjing Road… Will the Construction Ever End? where I wondered if the construction on Nanjing Road would ever come to an end. After all, it is the showcase street for Shanghai.

Well, 12 months after that post, while working on a retail project I was given an excuse to put together an update.. and while one would think we would be coming to an end, the construction on Nanjing Road clearly has a way to go.

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Following the post of a Youtube series highlighting some of Bejing’s architectural wonders, I went out and found a couple of clips on the World Financial Tower.

China’s tallest building, this structure has taken more than a decade to build. the Asia crisis stopped it, there were multiple design changes, and a little hole at the top created some negative public sentiment. However, as many of you will know, it was recently capped and is nearly completely encased in its glass shell… and it looks damn cool.

The first clip is one that you should run with the sound off as the background music is annoying, however the clip is really interesting. It is a computer generated clip that starts off with a couple minutes on the growth of Pudong from Pearl tower to 2010. It then takes viewers through a virtual map of the building..

The second clip is realy interesting as it brings together the architects and engineers to talk about the structure, the process of building it, and how the design incorporates various safety elements. .. before the clip cuts off

For me, while I find this building to be amazing, I have to admit that next to Jin Mao and across the street from the Lujiazui park, it is losing something for me. Lujiazui park with the various buildings surrounding offers an amazing panorama, and Jin Mao is just amazing all on its own, but throw it all together and I think each takes away from each other. Perhaps, they all add to each other, and I am not seeing it yet…

To make way for all of the new shiny buildings in Shanghai, Beijing, and other cities, it more often than not will involve the relocation of existing residents. There are dozens of stories in the press about citizens getting the short end of the stick in land grabs, and there have been a few famous cases of nailhouses (residents that refuse to move) in Chongqing and other cities.

At the most recent Crossroads movie event, this was in fact the topic of the film Shanghai - Waiting for Paradise.. which chronicled the lives of several generations living in soon to building World Expo site. for them, all went well on the negotiation side, but the social dynamics of the process was fascinating.

Recently though, I found out about one project where being relocated appears to have been a good thing.

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Set to start on August 8, 2008, the Beijing Olympics is being billed as “China’s coming out party”

All commerical indicators aside, one of the first signs of the grandeur of this project is the fact that Beijing has undergone a complete makeover.  Out with the old… in with the new.

It is something that while living in the middle of 24/ 7 rebar grinding, cement drilling, and pillar driving construction sights…it is hard to put much to paper.  However, I just found this fantastic 5 part series on Youtube that shows some of the behind the scenes.

While I have not lived in Beijing since SARS passed through town, and we have our own architectural wonders, I thought this series (you will need an hour to watch it) would be a easy way to get bring readers out of their Thanksgiving food comas and back into the real world.

Hope you all enjoy, and if anyone has some up to date pictures of the CCTV town,  please send them along.

Part 1:

Part 2:

PArt 3:

Part 4:

Part 5:

For much of the last 2 years, I have been working to convince people that the opportunities in China go far beyound the city limits of Shanghai, Beijing, and Guangzhou.  that if a firm looks at the cities of Wuhan, Chengdu, Xi’an, and Xiamen, they will uncover that there are some very interesting opportunities there, some strong talent, and financial rewards.

So when I read Chilton Investment sets sights on western China in the China Daily, I immediately saw this as a post.  According to Richard Chilton Jnr, the company’s chairman and chief executive

Chilton Investment had visited Chengdu and Chongqing this year and found many high-quality companies with limited access to capital.

“For most of them, we were the first western investors to visit,” he said.

and al I can say is that it is about time.  while I know there are firms (more manufacturing and real estate) focused showing interest (my second tier reports are one of All Roads most heavily trafficed posts), the fact is that many PE/ VC  funds have shied away believing that the best deals are here.

The problem is that for firms in Shanghai, there is a tour that everyone makes and with so much attention, so much “love”, the expected valuations are off the chart… but it is easy right?  the executives speak English (pay premium for that), they are McKinsey trained (pay premium for that), and their PPTs have embedded flash (pay premium for that).

Case in point, 2 years ago I was working with a portfolio of assets in Nanjing that offered a 90% chance of a 200% gain in 12-18 month time frame.  the company holding the assets was going through bankruptcy court and was looking to roll out from their debt.  The assets were clean, we had support from the court.. yet no one would bite.

why?

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Quickly following up on the impact of the recent foreign investment regulations in China, I found th article Shimao to build up 20 China hotels in the Shanghai Daily.

Xu Rongmao, Chairman of Shimao, apparently commented at the opening of the Hyatt on the Bund (Shanghai) that:

“As planned, we will open more hotels in cities with robust economic growth such as Beijing, Nanjing, Wuhan and Fuzhou.”

Interesting given they currently only have 3 (all in Shanghai).

The other interesting quote was from Hyatt themselves when the manager of the new facility said it plans to open 16 new hotels in the Asia Pacific region over the next three years, with 12 of them in China.

Why this piece (and the quotes) was so interesting was the timing. After all, in the new catalog, real estate investment in hotels is now a restricted item (so is management).

So, for those looking at the future of hotel and hospitality in China, I would say we are going to see 12 Hyatt/ Shimao hotels….

I am just curious who picked Fuzhou?