SINGAPOREANS rushing to cash in on Shanghai's property
boom need to tread cautiously.
The financial hub's municipal government may introduce
measures to curb the city's real-estate boom, reported
The Standard.
It follows a warning by its consumer watchdog of the
emergence of a "property bubble".
The Shanghai Consumer Price Bureau, in a report issued
last week and published partly in the Guangzhou-based
Southern Weekend, cited three reasons for its concern:
About 53 per cent of the home buyers are from other
provinces or overseas, and many bought properties in
the city for investment
Some property developers have, through clever
promotional campaigns, created an atmosphere of strong
demand
Several Shanghai residents have bought apartments
or houses as investments.
In the first quarter of this year, property prices
rose to 4,931 yuan ($1,047) per square metre - a 30
per cent increase year on year.
Prices of high-end properties rose by as much as 100
per cent, with buyers from overseas, other provinces
and Shanghai (pictured here) each accounting for a
third of the market.
But leasing prices have declined. That is a sign of
weakening demand.
The price of villas along central Huaihai Road dropped
to US$4,000 ($7,032) per sq m from a peak of US$7,000
per sq m a few years ago. Meanwhile, supply is
massive.
At the end of July, developers had 100 million sq m of
residential and commercial property projects underway.
About 80 per cent of them were high-end residential.
Southern Weekend said, however, although there were
indications Shanghai's property market was
overheating, the city was not ready for measures to
curb prices.
The property boom has also fuelled growth in the
banking sector. In the first half, total property
mortgage loans from commercial banks in Shanghai
surged 19.63b yuan - up 30 per cent year on year.
During the same period, new personal mortgage loans
(21.66b yuan) accounted for 88 per cent of total
property sales (24.63b yuan).
The amount was an indication that banks had relaxed
mortgage rules to compete for customers.
An official at the Shanghai branch of the People's
Bank of China said: "If property prices fluctuate, the
ability of some investors to pay their debts might be
affected."
In a recent research report, the Bank of China urged
banks to be selective when issuing new property
development loans.
Singaporeans have big stake in China's real estate market
SINGAPOREAN businessmen are very optimistic about
Shanghai.
It's their favourite investment destination in China.
Just two weeks ago, Keppel Land and CapitaLand proved
their confidence in China's financial hub.
Keppel Land and its partners officially opened the
US$110 million ($193.39m) 25-storey Ocean Towers
office building.
CapitaLand had a topping-up for its US$350m, 45-storey
Raffles City office tower.
There are about 3,000 Singaporeans living in Shanghai,
the highest number in any Chinese city.
Multinational corporations are flocking to set up
offices in there, giving a boost to office rentals.
Mr Kevin Wong, managing director of Keppel Land, said
property prices have appreciated sharply but the
bubble is not about to burst as there is sustainable
demand from local residents and foreign investors.
But further price increases are likely to be moderate
as the government will want to ensure a balance
between demand and supply.
Singapore firms are committed to invest a further $3.3
billion in 400 projects in the rapidly growing China
market in the first half of this year - a 28 per cent
jump in the number of projects compared to the same
period last year.
The grand total of all Singapore projects in China is
expected to cross 10,000 before the end of the year.
It has reached 9,875 to date, according to the latest
figures from the Chinese embassy in Singapore.
