Shanghai entire-block sales keep rising

Shanghai entire-block sales keep rising
By Gareth Powell, July 11, 2007
This is basically what the government does not want to happen. According to a report from Colliers, Shanghai’s en-bloc property acquisitions exceeded $1.3 billion in the first half of this year, coming close to the total for all of last year.

(What is this ‘en-bloc’ business? It is not English. Drop the hyphen, which no dictionary recognizes, and it is normally defined: ‘As a unit; all together.’ Here it appears to mean the whole building. So why does Colliers not use an English term like ‘entire-block’? Same reason computer companies say form factor instead of size. Because ‘en bloc’ looks more important than saying ‘entire-block’. It is this sort of thing that makes journalists old before their time.)

Putting en bloc to one side, think about the claim for a moment. In the first half of the year it was not that far away from the total for last year. That is not a market that is stabilizing, that is going backwards, that is totally under control.

Colliers International reported that residential and office properties were the two most sought-after types of entire-building deal.

Mac Chan, senior manager of research and consultancy at the real estate services firm, said, ‘This is significant growth as the en-bloc acquisition amount for the entire 2006 was $1.9 billion, according to our statistics.’

Among all en-bloc (or entire-building, if you prefer) investment deals concluded in Shanghai in the first half, 38% involved residential developments, followed by 32% tied to mixed-use properties, 17% to office space and 13% to industrial assets.

In 2006, office properties accounted for a dominant 61% of en-bloc transactions concluded in the city while the residential segment came in at 31% and retail 8%.

The report said overseas investors showed great interest in acquiring high-end residential assets in the first half of this year when five major deals were secured.

For example, Morgan Stanley purchased two blocks involving 219 units in Novel City in the Xujiahui area in January, and Indonesia’s Salim Group acquired a residential project in downtown Laoximen in April that has a gross floor area of 200,000 square meters.

If you have a lot of buying going on, prices go up. Capital values for luxury properties rose 2.7% in the first half, and rents increased 2.9% to $21.70 per square meter per month.
Source: Shanghai Daily