Over the last five years of observing and reporting about the Shanghai flat and housing market, 1 thing is certain. Apartment Shanghai property is past bubble. It is post-bubble. Or maybe bubble-proof. With the trend in effect, and with property and land holding the investment for a developing middle class who don’t have sufficient cash to replicate into Hong Kong or further afield, China home and especially the area of Shanghai is the real estate market around.
Additionally, the living cost in Shanghai is continually going up. 1 thing is certain — property agencies do really well in the near future with Shanghai property market Shanghai apartment lease is big business.
On Wednesday, global land consultancy DTZ/Cushman & Wakefield said that apartment Shanghai specifically will likely maintain double-digit growth in transaction volume and value this season. Foreign investors are not far behind, although the principal buyers are domestic.
Real estate investment deals, excluding property sales, are focused to complete $70 billion in Shanghai at 2017, a 20% increase from about $58 billion last year, according to a report by Wakefield. One sector is demand for serviced apartments around Pudong financial district.
The report cited reduced capital costs in China (and at the center markets like Japan) and yuan depreciation expectations lending to fears that now is the opportunity to enter the market before the currency value dives. The yuan is currency trading in 6.67, however, consensus estimates have it compelling closer to 7 at the subsequent six months.
The report also cited demand by local insurance firms who need challenging assets to hedge against low yielding fixed income. Insurance companies tend to invest in bonds. But inflation is around 1 percent in China and when bonds are yielding less than 3%, that doesn’t leave a lot of growth for carriers that wish to have. Many U.S. cities are on the receiving end of China life insurance company real estate investments, such as properties in Boston and the famed Waldorf Astoria. The iconic nyc hotel is now owned by China’s Anbang Insurance.
In Shanghai, Chinese individuals still play the dominant role in the market. Of the $18 billion worth of land deals 76% were sealed by investors.
Investors are looking for income. Office buildings are the most sought-after properties, accounting for nearly 60 percent of the total by apartment value in this year sold, Cushman data showed.