Tuesday, November 1, 2011

Oz

CHINESE BUYING PROPERTY IN AUSTRALIA

Chinese Buyers Sway Australia Property Market

SYDNEY—Conventional wisdom says a nation's house prices swing with its economy. In Australia, economists are paying increasing attention to another factor: Chinese immigration.

Wealthy Chinese are now among the biggest buyers of real estate in Australia, picking up properties ranging from modest suburban homes to waterfront mansions with views across Sydney Harbour.

In one of the biggest purchases this year, a Chinese buyer spent more than 50 million Australian dollars (US$46 million) for Altona, a home in the Sydney suburb of Point Piper that's frequently been rented out to celebrities, including U2 frontman Bono. Weeks earlier, another Point Piper mansion—dubbed the Bang & Olufsen House because it resembles a hi-fi system—sold to a Chinese buyer for more than A$30 million.

Now the influx of Chinese money is starting to skew Australia's real-estate data, which is closely watched by policy makers including the nation's central bankers. Economists at Citigroup Inc.,retooling the computer model that churns out the bank's predictions for house prices, found a previously unknown connection: Shifts in levels of Chinese migration were consistently echoed, three years later, by changes in property prices. So strong was the relationship that Citigroup has now worked it into its equations.

"The story of the rich Chinese businessman snapping up a A$40 million mansion in Point Piper is a trend that isn't likely to end anytime soon," said Joshua Williamson, a Sydney-based economist at Citigroup.

The bank said the reason for the correlation isn't clear. It didn't find a similar relationship between total immigration and property prices.

"It could be that Chinese immigrants have the income capacity and desire to buy property, more so than other nationalities," said Paul Brennan, chief economist of Citigroup's Australian operations.

Australia has long courted China's affluent. The first visa in a program that lets foreigners settle in Australia for up to four years in exchange for investing A$5 million went to a Chinese toy maker.

In the fiscal year ending June 2011, more immigrants arrived in Australia from China than from any other country. Although immigration from China fell 9% the next year, to rank behind arrivals from New Zealand and India, analysts and realtors point to several factors that should keep buying interest in Australian property strong.

For one, curbs on property speculation in China are forcing investors there to look internationally. Australia's schools are also a drawing card. International education is big business—generating about A$14.5 billion in export revenue last year to rank behind only iron ore, coal and gold—and a survey this month by HSBC this month showed growing interest in property purchases among parents of Chinese children studying in Australia.

Bloomberg NewsSydney's Point Piper, site of the A$50 million home

The falling Australian dollar—down 10% against the U.S. dollar over the past two months—is making property more affordable for overseas investors, says Richard Simeon, a real estate agent in the Sydney waterfront suburb of Mosman, which has panoramic views of Sydney Harbour.

Mr. Simeon, who has sold close to A$30 million worth of homes to Chinese buyers in the past few months alone, has to work in bulk to meet demand from wealthy clients. "I'm putting on a bus and taking them around and then trying to find out their price ranges," he said.

To be sure, Australia restricts the type of property that can be owned by foreigners, in a bid to limit the potential for a real-estate bubble. Nonresidents can't buy an existing home, and temporary residents who buy one must sell it when they leave. But anyone can buy and keep a home under construction or buy a vacant lot and build a home.

China accounted for A$4.19 billion, or 7%, of the A$58.40 billion of foreign investment on commercial and residential real estate in Australia in the year ended June 30, up slightly from a year earlier, according to Australia's Foreign Investment Review Board. That ranked it third behind the U.S. and Singapore. Data measuring investment by Australian citizens of Chinese birth isn't available.

While early real-estate deals overseas involved wealthy elites, this is starting to shift as middle-class incomes rise in China. "Now there is a bigger bracket,".

http://online.wsj.com/article/SB10001424127887324328204578568960003796852.html?mod=WSJAsia_hpp_LEFTTopStories

AUSTRALIA ATTRACTING CHINESE MULTI-MILLIONAIRES

An investment of A$5 million can yield Australian residency under a recently launched visa program. Alan Lee of Moisson Group tells the WSJ's Deborah Kan why his Chinese clients are attracted to Australia.

Australia said that so far it has attracted 170 applicants to a new program to develop foreign investment by offering overseas millionaires the right of residency in return for a portion of their wealth, in a bid to help the country compete better against other nations for money and expertise from abroad.

The so-called significant investor visa was launched in November. If all those made so far are accepted, the applications, believed to be mostly from China, would translate into inbound investment of at least 850 million Australian dollars (US$877 million).

Enlarge Image

AFP/Getty Images

Australia's Sydney Opera House in Sydney harbor.

The program lets foreigners settle in Australia for up to four years, then seek permanent residency, in exchange for a minimum A$5 million investment during their stay. The money can be placed in federal or state bonds, managed funds, Australian companies, or in a combination of those assets.

The push by Australia to start attracting foreign investors by offering them residency comes as the country faces what Finance Minister Penny Wong terms a new reality, as a decadelong mining boom evaporates amid a slowing global economy.

The country is also playing catch-up with others offering visas to the wealthy investors. Its neighbor New Zealand, offers visas to those willing to invest as little as 1.5 million New Zealand dollars (US$1.3 million). And the U.S., a magnet for Chinese investors, grants green cards to qualifying foreign nationals for investing as little as $500,000 in a qualified U.S. business that creates a minimum number of jobs. In the fiscal year ended Sept. 30, more than $1.8 billion was raised by the U.S. this way and 7,641 foreign nationals were issued visas, 80% of them Chinese.

In Australia, successful applicants are allowed later to apply for permanent visas. There is no upper limit on the number of special visas the government can grant. Consultants at Deloitte expect the total to climb to around 700 a year, potentially at least A$3.5 billion in fresh foreign investment.

China buyers to prop up Aussie home prices

Investment over next seven years can push home prices even higher: study

So far so good: The Credit Suisse report found that Chinese buyers bought 12 per cent of new housing nationally per annum, an amount considered insufficient to drive prices up across Australia. - PHOTO: BLOOMBERG

[SYDNEY] Wealthy Chinese will pour A$44 billion (S$50 billion) into Australian real estate over the next seven years, potentially pushing prices in one of the world's most expensive housing markets even higher, a study said yesterday.

Investment bank Credit Suisse used data from the Foreign Investment Review Board and other government agencies to estimate the amount of Chinese investment in Australian residential property at more than A$5 billion a year.

"They purchased $24 billion of Australian housing over the past seven years; we forecast they will purchase $44 billion over the next seven, to 2020," it said.

As the Asian powerhouse becomes richer, the ranks of those who could easily afford Australian real estate will swell beyond the current 1.1 million people, with implications for Australian home-buyers, it said.

Chinese Investment in Australia

Friday, October 28, 2011

Infrastructure

SUBSIDENCE

You mean like this?

This is at a strategic intersection where cyclists ride their bike.

Last night the winds blew away the sign.

So guess its now urgent enough that they sent a crew to fix. Hmmm....should the infrastructure be crumbling at this stage? Wonder how much this costs?

Friday, September 9, 2011

Shanghai

A photo posted by @deedeepoon on Jul 16, 2015 at 6:18am PDT

In the clouds

Shanghai's greenest & tallest skyscraper - Financial Times video

Shanghai's green skyscraper - Financial Times video

It's not Causeway Bay, but Times Square in Shanghai is giving locals a taste of the shopping experience at one of Hong Kong's best-known luxury malls. Photo: SCMP

A woman walks past the towering ICC complex then attends a class at Pure Yoga. After the workout, she grabs something to eat at city'super before heading to browse at Lane Crawford in Times Square. You might assume from the names that this is taking place in Hong Kong. But it is in fact Shanghai.

Already a rival to Hong Kong for clout as a global finance centre, Shanghai is stepping up its offerings as a shopping capital, too. Carbon copies of Hong Kong shopping landmarks have popped up in the city, replicating Hong Kong's retail scene from the names right down to the design of the buildings.

Gleaming new mall iAPM, which houses well-known Hong Kong brand city'super and has a Pure Yoga studio, opened in August. The Sun Hung Kai Properties development is anchored by a two-storey Prada store and sister brand Miu Miu, and more than a dozen other luxury brands. The soaring ceilings and curves of shop windows mimic its sister project in Kwun Tong.

"I live next door to iAPM and it's literally like having Hong Kong right there," says Jacqueline Kwok, a Hongkonger who has been working in Shanghai for the past three years.

Shanghai native Cai Renbin says the malls are an exciting development, which cements Shanghai's status as a world-class city. "I really like those modern buildings. As a local Shanghainese, I'm actually quite proud of seeing the construction because it can prove Shanghai is an international city," he says. "Shanghai will be more like Hong Kong in the future."

The cloning of Hong Kong shopping malls in the commercial capital of the mainland goes back to 1999 when Wharf (Holdings) opened a replica of its Causeway Bay Times Square mall on Huaihai Lu. That was followed three years ago by SHKP's IFC centre in Pudong.

Spot the difference: Times Square in Hong KongThis year in particular, Shanghai experienced a spurt of development by Hong Kong retailers and mall developers.

Last week, Lane Crawford celebrated the opening of its flagship Shanghai store, the luxury department store's largest to date. Besides iAPM, the K11 mall opened in May, and like its counterpart in Tsim Sha Tsui, it appeals to consumers' tastes for shopping and art.

There's also the new Jing An Kerry Centre. Although there's no direct parallel for that in Hong Kong, it oozes the style and sophistication of a Hong Kong mall and boasts many of the city's most prominent brands, like Pye by socialite Dee Poon and b+ab from fashion mogul Shum Kar-wai. The only thing retailers and mall developers haven't been able to replicate is a tax-free shopping environment.

It's early days yet at these malls. Several of the tenants within the complexes are not yet launched. However, three months after iAPM opened its doors, the only real bustle of activity on a Friday night is a queue outside Jesse's, a restaurant known for serving authentic Shanghainese food.

The stores at the Kerry Centre on a Saturday afternoon are eerily quiet - the mall's hi-tech motion sensor escalators stay still and shop staff idle around.

"My friends and I, we don't really go there," says Summer Zhang Shoufeng, who works as an account manager for a hotel supplier. "If we want to buy something, we still prefer to go to Hong Kong or abroad because it's cheaper there."

Originally from Shandong, Zhang has been living in Shanghai for eight years. Well-travelled and well-heeled, she's been to Hong Kong, Japan and all over Southeast Asia and Europe, spending most of her money on shopping when she travels.

If she sees a certain style of luxury-brand product she wants now, she can just ask one of her friends to bring it back from abroad, she says. Chances are one of them will be travelling overseas and she won't have to wait too long. "If I really want it, they will buy it for me and I can just give them money," Zhang says. "I go [to those malls] for dinner, to watch a movie, that's it. Not for shopping."

Even Cai, as proud as he is that his hometown now boasts these topnotch malls, says he doubts local Shanghainese will buy luxury goods there because of the price difference.

Andrea Fenn, managing director at Fireworks, a luxury brand consultancy on the mainland, said: "Consumers are extremely shrewd. Even if it's a Ferrari, they don't want to pay 100 kuai more than what they know it's worth. If they know they can buy it somewhere else for cheaper, they will. A lot of Chinese luxury consumption is based outside China. They send someone to Paris or Hong Kong because they know it's cheaper."

To get an idea of the mark-up, a men's shirt costs 1,180 yuan (HK$1,490) in the Kerry Centre Pye store, compared with just HK$1,080 at the brand's outlet in Pacific Place. This premium is common among foreign brands and, after taking the strong yuan into account, mainland consumers are often paying upwards of 20 per cent more than customers elsewhere.

That may alienate Shanghai residents, but property developers are counting on shoppers from second- or third-tier cities, for whom paying 20 per cent extra is a more agreeable option than the costs and hassles of a flight and permit to visit Hong Kong.

"We expect these malls will attract people from the inland. They don't have a chance to go to Hong Kong because it's not easy for them to apply for a permit. It's easier for them to go to Beijing and Shanghai and it gives them a new kind of shopping experience," says Wesley Wu, a luxury and retail analyst with Ipsos.

"SHKP is building complexes with the same names and designs to give it the prestige that Hong Kong already has. It's just like Shui On is doing that with Xintiandi around China," says one mainland property developer, referring to the Hong Kong company's retail and entertainment projects modelled on its developments in the upmarket Shanghai precinct.

"It's so hard to get the brand name out to the public. I think it's a great strategy for them. Everybody talks about going to IFC in Central or Times Square in Causeway Bay. It's a symbol."

Glitzy building designs and luxurious labels aside, Shanghai may also be signing itself up for the same problems as Hong Kong. Just as Hongkongers have long complained that Hong Kong malls do not cater to locals, Shanghai malls may no longer be for Shanghai shoppers.

This article appeared in the South China Morning Post print edition as HK in the heart of Shanghai offers city a new retail beat

Shanghai Glut Rises With Newest Tower as Rents Fall: Real Estate

Dec. 17 (Bloomberg) -- When completed in 2015, the Shanghai Tower will be China’s tallest building. The 632-meter (2,074- feet) skyscraper will also deepen a glut of offices in the city, putting pressure on rents.

The project, in the Lujiazui financial district, will add 220,000 square meters (2.4 million square feet) of office space, or more than 10 percent of the new supply forecast for the city in 2015, according to RET Property Consultancy Ltd. About 2 million square meters of grade-A offices will be added between 2014 and 2015, more than double the supply in the previous two years, according to broker Savills Plc.

The Chinese government’s resolve to turn Shanghai into a global economic, financial and shipping hub by 2020 has led to an office building boom to accommodate companies such as Citigroup Inc. and Nike Inc. that set up a presence in the city. Rents in Shanghai may fall as much as 17 percent in the next three years as space is added and the world’s second-largest economy strives to maintain growth that has averaged 10.5 percent in the 10 years to the end of 2012, according to broker CBRE Group Inc.

“Such a big supply will pressure office rents in prime locations,” said Alex Chen, Shanghai-based senior associate director at RET Property. “The numbers are showing that vacancy rates and rents are definitely heading in a negative direction citywide.”

Office rents in Shanghai fell 0.3 percent to 8.41 yuan per square meter per day in the third quarter, the first quarterly drop since 2010, according to Savills.

Tallest Towers

Once finished, Shanghai Tower will rank as the world’s tallest building after the 828-meter Burj Khalifa in Dubai, data compiled by Chicago-based Council on Tall Buildings and Urban Habitat show. It will surpass China’s current record holder, the 492-meter Shanghai World Financial Center, which is diagonally across Dongtai Road and houses the local offices of Google Inc. and Ernst & Young LLP .

Lujiazui, on the east side of the Huangpu River in Pudong and across from the Bund historical waterfront area, has evolved from rice paddies three decades ago into Shanghai’s main financial district. The 421-meter Jin Mao Tower, now the city’s second tallest, sits across from Shanghai Tower and Shanghai World Financial Center.

Most offices being built over the next two years will be located outside prime areas where land is becoming scarce. About 70 percent of the new office space expected by 2015 will be in non-prime locations including those near Shanghai’s smaller airport in the city’s west and the area where the World Expo was held in 2010, Savills said.

Vacancy Rates

The vacancy rate in Lujiazui is 3 percent and will double to about 6 percent by the end of 2014, according to CBRE. The grade-A office vacancy rate outside the central business district rose 0.3 percentage points to 24 percent in the third quarter from the previous three months, according to a report by Jones Lang LaSalle Inc. in October. For the entire city, the rate stood at 7.5 percent, the Chicago-based broker said.

“Lujiazui is currently the submarket with the lowest vacancy rates in the city and there are very few projects that will be completed” in the area over the next three years, said James Macdonald, Shanghai-based head of China research for Savills. “At the same time, demand for space in Lujiazui is still relatively strong.”

Office rents in the area were 10 yuan per square meter a day in the third quarter, rising 53 percent since the same period in 2009, according to Jones Lang LaSalle. The firm forecasts rents to increase 5 percent in the next two years because of the extra space Shanghai Tower will add to the market. Rents rose 14 percent in the two years that ended in the third quarter.

Trade Zone

The government is pushing Shanghai, home to the larger of the nation’s two stock exchanges as well as interbank bond and foreign-exchange markets, to become a global hub for finance and shipping.

To reach that goal, the city inaugurated a free-trade zone in September as a testing ground for free-market policies that Premier Li Keqiang has signaled may later be implemented more broadly in the country. About 400,000 square meters of grade-B office space is in the 29-square-kilometer (11-square-mile) area, according to CBRE. Prime or grade A refers to the most stable high-income producing properties.

By the end of 2012, there were 1,227 financial institutions, including banks, securities firms and insurers in Shanghai, city Mayor Yang Xiong said in a speech on June 28.

‘Impending Glut’

Among developers that are joining the construction spree are Shui On Land Ltd., the Chinese company controlled by Hong Kong billionaire Vincent Lo, which is building Hongqiao Tiandi, an office and restaurant precinct, near the airport. Soho China Ltd., the biggest developer in Beijing’s central business district, is building a 86,000-square-meter mixed-used project called Sky SOHO in the same area, including office and retail space designed by Pritzker Prize-winning architect Zaha Hadid.

“The sheer volume of supply will place pressure on the city’s overall market,” said Macdonald at Savills. “Landlords have become increasingly aware of the impending glut of supply and have taken steps to ensure that they can maintain satisfactory occupancy levels” by cutting rents.

The overbuilding has drawn the attention of regulators. China Banking Regulatory Commission’s Shanghai branch asked banks to pay “high attention” to financing risks of the city’s commercial real estate, China Business News reported on Dec. 5, citing a notice issued by the regulator. The regulator said the city’s commercial real estate is “over supplied” and the market is “nearly saturated,” according to the report.

Physical Height

While new offices will mainly be located outside Lujiazui, it may still take time for the 125-story Shanghai Tower to be filled, said Sam Xie, a Shanghai-based property analyst at CBRE. The vacancy rate at Shanghai World Financial Center dropped below 25 percent only three years after the skyscraper opened in 2008, said Xie.

Shanghai Tower, being built at a cost of 10.3 billion yuan ($1.7 billion), will include offices, a luxury hotel and retail space. Developer Shanghai Tower Construction & Development Co. could have gone taller, President Gu Jianping told reporters in Shanghai in August, however the company didn’t aim for physical height when planning the building.

An increasing number of companies have chosen to move out of the traditional commercial areas to locations where rents are less costly and they get more space, according to Jones Lang LaSalle, which estimates companies can save about 50 percent with such moves.

Moving Away

Nike said last year it will lease about 600,000 square feet for its new headquarters in a Tishman Speyer project in the Yangpu district. The world’s largest sporting-goods maker may move from Plaza 66, a development on West Nanjing Road in the downtown area that stretches behind the Bund, as early as next year, said Anny Zhang, a Shanghai-based director at Jones Lang LaSalle who oversees office leasing.

“Landlords in downtown have already felt the pressure as they had to compete with those that offer cheaper rents in non- centralized areas,” Zhang said. “They may offer incentives by restructuring the leasing contracts with tenants or increase commission fees for brokers.”

It is uncertain how many companies will move out of prime locations because of moving costs, RET Property’s Chen said, adding that the market may not be “as bad as projected.”

Less Prime

CapitaLand Ltd., Southeast Asia’s biggest developer, has fully leased one of its office towers on the outskirts of Shanghai for about two-thirds of the rent at its Raffles City building near People’s Square in downtown, said Jason Leow, the China chief executive officer at the Singapore-based developer.

“Lots of companies which don’t need to be in the city center are moving to the suburbs, so that provides an alternative to people who want more space but less prime buildings,” Leow told reporters in Shenzhen on Nov. 26.

Shanghai still has room to add offices because the amount of space pales in comparison to other cities, said Anthony Couse, Shanghai-based managing director for East China at Jones Lang LaSalle. Grade-A office space in Shanghai is 7.1 million square meters, compared with 11.1 million square meters in Hong Kong and 23.6 million square meters in New York, according to the broker.

“This is a tiny city, geographically massive, but compared to total supply of office space of other cities, there’s very small grade-A space,” said Couse.

Office rents will start rebounding after 2016 as demand picks up, while the vacancy rate is expected to drop back to below 10 percent by 2020, London-based broker Knight Frank LLP said in an October report.

Until then, the addition of offices, especially in areas outside central business districts, will put pressure on rents as demand declines, CBRE’s Xie said.

“We are not very optimistic about office rents in Shanghai in the 2014-2015 period because there’s no explosive demand behind,” he said. “The impact of offices in the decentralized areas will be very big on the market.”

Shanghai Tower seeks international leasing agent

Xiantiandi

Brookfield Bets Big on China

Despite fears that China may have a glut of office space, Toronto-based real-estate firm Brookfield Asset Management BAM.A.T -1.09% is betting big on the country, with plans to aggressively expand its portfolio of commercial space.

The company last month completed a deal to buy a nearly 22% interest in a unit of Hong Kong-listed property developer Shui On, which built the popular Xintiandi commercial complex in Shanghai. First developed in 2001, the site encompasses some 60,000 square meters (nearly 200,000 square feet) of retail and commercial space and sits adjacent to an additional office complex developed by the company.

Brookfield Chief Executive Bruce Flatt said that after spending recent years investing in distressed developed economies, the firm is bullish on China's office sector and focused on the long term. Mr. Flatt says the firm's new venture—its first in China—will allow it to tap into Shui On's local insights and ultimately yield at least 15% on equity.

Brookfield is among the largest office-space owners in the U.S. and Canada, with landmark properties including Brookfield Place in Manhattan and Bank of America Plaza in Los Angeles.

The Xintiandi brand has expanded to other Chinese cities—including Wuhan, Chongqing and Foshan—and spawned dozens of imitators. Shui On Chairman Vincent Lo was rebuffed by Chinese authorities in an attempt to copyright the name, which means "new heaven and earth." Since its development, the outdoor complex—home to clubs and boutiques built in an old warren of redeveloped courtyard houses—has become a byword for urban redevelopment catering to the modern Chinese consumer.

In the next five years, says Mr. Lo, he expects the company will more than double the current number of locations of Xintiandi developments. The management unit, China Xintiandi, also is planning to go public, likely in Hong Kong in 2015.

Foreign property developers usually work with local partners in China, relying on them to secure land sites and navigate complex regulatory hoops. Chinese developers also have become more receptive to foreign partnerships, especially to bolster their expertise in retail property management.

But picking the right sites and partners is tricky, as many Chinese cities are overbuilt.

According to real-estate consultancy CBRE, the office markets in tier-two Chinese cities—large cities that nonetheless lack the stature of leading Chinese cities such as Beijing and Guangzhou—are often more risky and at an early, uncertain stage of development. China's property market generally has a two-tiered structure in which top cities such as Shanghai and Beijing see strong demand and liquidity, but markets in second- and third-tier cities face a supply glut.

Such cities have been inundated by poorly conceived office and retail projects, many with units that have been individually sold and are badly managed as a result. That phenomenon has driven investors into competition for a limited pool of higher-quality, investment-grade projects run by a single owner. Asset prices of such existing projects have skyrocketed, driving yields lower. Some foreign investors now are starting to develop their own such projects.

New York-based real-estate developer and investor Tishman Speyer, which first entered China in 2006, is planning to continue developing projects in major cities where it already has a presence, such as Chengdu and Shanghai, as well as expand to Beijing and Shenzhen. The firm, which has local partners, also is targeting bigger projects. "Larger projects give a developer the opportunity to create an environment, not just a single building", said Rob Speyer, co-chief executive of Tishman Speyer in a recent interview.

Mr. Lo says that although Xintiandi's current office-tenant mix remains mostly international, over the past couple of years he has increasingly seen local Chinese companies also express interest in their Grade A space.

Together with Mr. Flatt, he said, he is interested in actively expanding in second-tier cities such as Wuhan and Chongqing. "It's crazy that a city like Wuhan, which has over 10 million in population and is a regional center, doesn't have a CBD. Can you imagine the opportunity there?" he said.

In the coming decade, says Mr. Flatt, as Shanghai develops into a global financial center, he expects that the area surrounding the flagship Xintiandi location—a complex that helped launch the neighborhood, now a bustling commercial center—will become more significant still. "Xintiandi will be the West End of London," he said.

Wall St. Journal 2014 February

1935 Historical Map of Shanghai

From TROVE

RealEstateFundManager.com