Saturday, June 18, 2011

Real Estate and Inflationary Prices in Shanghai

Real Estate

1 bedroom apartment in Shanghai in a new complex will go for anywhere between 2- 3+ Million RMB. That's about 300-500K USD. There are approx 63000 empty apartment units currently open in Shanghai unfilled.

The Cash in the bank is not keeping up with the real rate of inflation. It is fetching a Negative 4%. So real estate is the only way to go for appreciation.

Tech Sector -  this once again proves how there is no way to make any progress into the chinese market unless you are in bed with the communist party members. 

Interest rates in the banks for RMB is yielding negative returns so people are putting their money into real estate. However, he also says that more than 63000 apartments are standing empty unoccupied in shanghai.

People put their money into housing because they believe that's the only place where they can get real rate of return. Like many reports, the mainlanders are not buying housing in HK to stave off potential drops in the market.

iPad - credit, consumerism . his idea is that the consumerism elitist attitude is going to be 10x worse here in china than in HK. Also that China is going to become old before it becomes rich. unlike japan which became rich and then got old. There is a large demographic in china that is growing old rapidly. Also there aren't going to be enough workers to cover manufacturing because the female worker population will be dwindling. the 1990-boom was based on the population of working age that was born in 66-76 ; they needed to put all of these people to work, and so opened up the markets, and increased foreign investment and jobs.


Prices are inflationary.

The cost of Mcdonalds - a meal is 30-32 RMB in Shanghai, and 26-28 in Hong Kong.  1 USD = 6.48 RMB,  1 USD = 7.7HKD

2 people meal in Shanghai for 187 RMB at a local chinese restaurant, 4 dishes 2 drinks.  mid range.

Tipping is a foreign concept here.

Pacific coffee company - mocha blended drink - medium size is about 5.88 USD, with whipped cream was extra 5RMB, so total is 40 RMB, or 35 RMB


Costa coffee is a Starbucks look a like that is originally italian, and has significant retail space in Shanghai. It looks like a Starbucks copycat.

Joe says the government reports fudge the inflation numbers all the time. the real rate of inflation is about 8% but they're only doing 4% on the banks so people don't want to keep cash in the bank , its negative interest rate is really painful. they'd rather put it into real estate.

Alvin tells me that his Shanghai friend's family bought property about 1 year ago , it was 2/3 down and their mortgage has a whopping 20% interest on it.

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