I want to start this thread basically to help educate un-savvy Shanghai new-comers about some of the dodgy real estate deals to watch out for here...and also to provide a venting place for posting the familiar feeling of "wtf...that much money, for THIS *%#^ place?"

Each person should post the most ridiculous Shanghai real estate deal they've ever come across

My 2 cents:

3 bedroom apartment in Xujiahui. 150m/2. Two bathrooms. 15 minutes walk to subway.

Renovation is plain, nothing special. Flooring is look-alike wood. Kitchen was planned so badly in the building design phase, that it is without a large window (and therefore dark and dingy), is as small as an average bathroom/toilet, is angular, has rusting stove elements and has a huge plastic sewerage pipe down the wall from the apartments above. Plus the communal elevator is dirty. The place hadn't even been dusted for clients when they come to have a look. All of this and the building is supposed to be around 1-2 years old.

How much would you pay for this? They wanted: 3.3mil RMB

hahahahahahahahahahahaha

the entire real estate mkt. in shanghai is a sham. from some of the articles i've read, it's selling at price comparable to that of tokyo. 3.3 mil rmb is nothing. there are all kinds of million+ USD properties out there. not so much caveat emptor as "buyer be not RETARDED!"

Yep, we've looked at buying for a couple of years but knew the bubble will pop one day.

Recently we were in Yokohama visiting family. They had just bought a new 3 BR apartment near the beach for 25 million yen (roughly 235,000 USD). The finish/workmanship on this place was incredible.

No-one can convince me shoddily built Shanghai places are worth more.

My friend who rented recently was told by the agent that there was a 35% 'agents fee' he needed to pay up front. Naturally he refused and the guy backed down.

Some R/E shops around here have closed recently. It will be interesting times.

Is there a housing bubble in Shanghai? From someone who's not living in Shanghai, obviously, I am not qualified to answer this question.

But from someone who's working in the biggest real estate lending bank in the US, I will just throw in my 2 cents in this topic.

The housing market is vulnerable to a housing bubble when the average housing price far exceeds the average household income could afford.

Case in point: the highest average housing price in the USA is in the San Francisco Bay Area. The average house there costs an average of $689K USD. To qualify for a loan to purchase an average house in San Francisco will require an annual household income of $167K. The average household income in the Bay Area is $78K. So the housing market in SF is extremely vulnerable to a housing bubble. On the other hand, the average housing price in Dallas is around $180K, which only requires an average household income of $38K to qualify for a loan. The average household income in the Dallas Fort Worth area is $56K. So the housing market in Dallas is definitely not vulnerable to a housing bubble.

I have no data on Shanghai's average household income. But let's just guess a family earns about 6000 RMB a month, or 72K RMB a year. Obviously, no sensible commercial lending company will approve this family to purchase a 1M RMB apartment. But Shanghai is such a big, diverse city. You can probably buy something with 500K RMB in the far, remote part of the city. And taking into account that Chinese home buyers usually put a larger percentage in downpayment than in the USA, I really don't think Shanghai is in more of a housing bubble than SF. Obviously, you expat guys are talking about more high end stuff than the average households in SH. That high end market also consists of a great influx of rich Chinese businessmen from all over the country. When those guys stop buying, I believe the bubble will burst. But when will they stop buying? Any time soon? I don't know.

Obviously, you expat guys are talking

Actually those guys are talking without thinking as usual. They think prices are high in Shanghai because the bad locals are out to cheat them (and cheat other locals). Often these guys are English teachers who haven't travelled much. In fact it is just a matter of supply and demand. For the price of my Shanghai apartment, I can buy a very large house with a huge garden in my hometown, a 10 minutes drive to the lake and mountain. But what can I buy in Paris, in Zurich, in SF for that price? We live in a capitalist world. Interestingly these are usually the same foreigners who complain China is a bad communist country and hope demoncracy and market economy will come. Now THAT is funny.

I'm no expert but I was under the impression that much of the high end up stuff in Shanghai was bought by Taiwanese and people from Hong Kong.

Regards, Matthew

3.3 mil rmb is nothing. there are all kinds of million+ USD properties out there.

That is basically not true. You are talking (probably have heard rumors) about special special cases, e.g. the penthouse apart overlooking the river bought by rich chinese to help his friend the developers promote the building etc. For 4-5 millions you can get a large luxury apartment in the very downtown of Shanghai. Mine is half the size (and price) in a similar location - and thats more than enough for a normal expat family. Old houses are more expensive nowadays, especially if "municipally preserved" but thats normal. Most apartments purchased by locals (my colleagues at least, well paid execs) will be between 1-1.5 million. So your 3 million is definitely more than nothing.

bought by Taiwanese and people from Hong Kong

I understand there used to be lots of "remote buying" of apartments in Shanghai by those overseas guys who found it was so cheap here. Many still think it is cheap. Would be interesting for those guys to read the comments above (and the other way round).

busyexpat wrote:[b]3 bedroom apartment in Xujiahui. 150m/2. Two bathrooms. 15 minutes walk to subway.

Renovation is plain, nothing special. Flooring is look-alike wood. Kitchen was planned so badly in the building design phase, that it is without a large window (and therefore dark and dingy), is as small as an average bathroom/toilet, is angular, has rusting stove elements and has a huge plastic sewerage pipe down the wall from the apartments above. Plus the communal elevator is dirty. The place hadn't even been dusted for clients when they come to have a look. All of this and the building is supposed to be around 1-2 years old.

How much would you pay for this? They wanted: 3.3mil RMB

hahahahahahahahahahahaha

I have seen quite a few in the same area, (and other areas) over the past few months. Typically 100m2 say for RMB 2.8 million in that location.... A big percentage of the ones I looked at are owned by non-Chinese and bought for investment/speculation purposes I assume. However move out of the more major western orientated apartment complexes then there are some better deals but they need to be hunted out.

Having said that the market seems to be in such a state of change that buying anything at the moment will need careful thought.

it is true to a certain extent that the taiwanese and hongkongers "cook" up the price of the estate market, i have a taiwan estate friend and he confirms that, but i would not call it a rip off.

in all transactions, there is an offer and acceptance. if they offer and you think its reasonable after seeing it for yourself, then its a deal. i would say its only a rip off if they did not give you the house you see with your own eyes after paying.

Quoting high price? well, you can always walk. and people who spend that kind of money buying the mostly vacant condos in pudong have their own set of thinkings, eg. long term investment, short term investment etc. you cant say they are being ripped off, i dun think anyone will pay that kind of money without having to convince HIMSELF that he is going to be rip off. Same as stock market, if you speculate wrong, you lose. otherwise, you win.

"But what can I buy in Paris, in Zurich, in SF for that price?"

Apples and oranges. A simple case of Economics 101. Those cities are far more highly developed, a higher cost of living, a much higher average income, stable monetary policy (less/no 'hot' or, dare I say, 'corrupt' money flowing in looking to be parked somewhere) and with far higher standards of construction.

"Actually those guys are talking without thinking as usual"

So, if the market isn't overheated why is the government trying so hard to cool it?