Buying Property: Your Advice and Views

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This topic contains 121 replies, has 28 voices, and was last updated by Rick in China Rick in China 5 years ago.

Viewing 20 posts - 1 through 20 (of 122 total)

  • Ian
    Participant

    I’m currently apartment hunting with my wife in Chengdu. I just wanted to get some advice and views regarding buying property in China.

    We wont be able to buy within the third ring road. It’s just to expensive even the second hand market.

    #9927
    Charlie
    Charlie
    Keymaster

    If you’re planning on living in Chengdu for many years in the unit that you buy, I think it makes sense. Property values have been skyrocketing and outside of 3rd ring road Chengdu is still relatively cheap. You mention that you’re married and for me that would be a requirement as well (I wouldn’t be very comfortable buying property in China as a foreigner, personally).

    With that said, I wouldn’t want to live outside of third ring road personally, even though I work outside of third ring road currently. Outside of third ring road just feels pretty dead to me. And although property values have gone way up, rent hasn’t drastically gone up in Chengdu – it’s a renters market right now with everyone becoming real estate speculators. Most Chinese buildings are poorly constructed and falling apart, I like not having to be responsible for that.

    I don’t think I would ever invest in real estate in China for a few other reasons though. The most important is that you do not own land, you can only purchase a condo for 80 years. If/when I buy property, it will be land that can be developed and purposed as I see fit. It will also be in a place where I would want to live for decades or potentially retire in and as much as I love it, I don’t think anywhere in China meets that criteria for me.

    Just my $0.02

    #25311

    Urglefloggah
    Participant

    Hm, not sure how the current prices are since we got hour flat before the area was even finished, but a nice place to look is the Nancheng Duhui area around the First Hospital.

    Nice and quiet, but still central enough with the Metro and all. Only drawback is that it’s such a new ara that most taxi drivers can’t find it without help, and takeaways don’t deliver out here (yet) as they think it’s too far ooutside the city.

    #25312

    Valerie
    Member

    I know little to nothing about this topic, although I just wanted to share my info about Nancheng Duhui. I have been living in this area since August and have become familiar with it. It has been developing into a clean, nice upcoming area in my opinion. There is a brand new beautiful Kindergarten in the center of the Le Parc buildings that will open soon and from my understanding it’s the only one in the area. I live directly behind the 1st hospital and yes, cabs are hard to get to and from. Shopping centers are popping up quickly and the models of this area seem to display a great place to live once everything is all finished. Super close to Hi-tech metro stop, fancy club house gym with pool here, and good bus routes as well. Galleria, Auchan’s and IKEA all within 10 minutes. I have no trouble getting into the inner city and in a timely manner, I think. We live in a fancy place where I know the rent is super cheap. Lots of empty places in these buildings, so there is plenty of availability.

    Just thought I’d add onto the above suggestion 🙂

    #25314
    ng so fan
    ng so fan
    Participant

    I have the same interests here. However since properties here have very poor maintenance n worn out so quick, i would consider only new ones i.e. within 1-2 yrs n in good areas where property price seems more secutrd. Agent told me there will be 2% agent fee & a kind of sales tax to govt i.e about 6-7%… so it will add about 10% up as cost. If there is any another hidden costs? Anyone knows? And if a foreigner can alone buy a property here? Any condition? And any idea who is the best developer here? Any input is highly appreciated.

    #25315
    Brendan
    Brendan
    Moderator

    My advice would have to be do your homework, take your time, and perhaps don’t buy anything until the 3rd quarter of the year. Everything I know suggests that prices will be falling by the middle of the year. There are so many empty properties developers can not sell across the city. Bigger developers can afford to continue building regardless (for now), but a number of mainland developers are already feeling the pinch, and eventually they will start unloading at reduced rates unless they want to face bankruptcy. My landlady has been trying to sell her apartment for 3 months now, and in that time there has not been one single viewing, and I’m right downtown in a supposedly sought after complex.

    #25318
    JerryS
    JerryS
    Participant

    Whats the most can it drop? It’s a bubble and waiting for it to deflate. I hear in Shanghai, prices can reach up to 40k per sq meter…

    #25322
    Charlie
    Charlie
    Keymaster
    Quote:
    Whats the most can it drop? It’s a bubble and waiting for it to deflate. I hear in Shanghai, prices can reach up to 40k per sq meter…

    It can drop a lot. Chaoyang (downtown Beijing) is 60k/m2.

    #25323

    Ian
    Participant

    What we have noticed is there are no new properties within the third Ring Road under 10,000 per square meter anymore. We are currently looking for places close to the planned subway lines.

    It’s a nightmare if your buying second hand, we saw a nice apartment within our price range, but you now have to pay a 5% trading tax 3.6% government tax and a 1% contract tax if buying a secondhand property. Also if you go through an agent you have to factor in their charges. It looks good on paper, but lots of hidden costs.

    Also whats very popular is you will see lots of apartments on the market were you pay the seller the house deposit fee and just take over their mortgage repayments. For example for a 2011 build. You pay 40% of the current property value (not the purchased value) you take over the sellers mortgage payments and pay the seller back all of the previous monthly mortgage repayments. This is widespread.

    Arghhh

    #25325
    shu
    shu
    Participant

    If u really wanna buy, do it ASAP

    #25326
    JerryS
    JerryS
    Participant

    isnt it better to take over a mortage? seems cheaper than market value.

    #25327
    Ray
    Ray
    Participant

    @ Ian: I sympathise with you man, really. About two years ago i “had to” buy and briefly did the apartment run-around. it was demoralising. Remember seeing a place, 2nd hand for about 700K, near Yulin. Expected alot for that price; man, got a rude shock very fast. My situation changed, and as Charlie said, I’m also more than happy to rent these days. Good luck, man.

    #25329
    Charlie
    Charlie
    Keymaster
    Quote:
    isnt it better to take over a mortage? seems cheaper than market value.

    Take over a mortgage after paying 40% of the current (inflated) market value in addition to every mortgage payment that the previous owner paid? I don’t have much knowledge about mortgage or property law in China but if deals like that are common as Ian says, that does not sound favorable for buyers. Sounds like a great deal for someone wanting to get out of Chengdu real estate while it’s hot.

    #25334
    JerryS
    JerryS
    Participant

    Yea the current market is def inflated. If its the current market rate at 40%, not worth it at all. If it were 40% of the value when it was purchased and then taking over the payments, sure that’s a steal!

    A few apartments around the downtown area use to be in the range of 3-400k rmb, about 2-3 years ago. Now those same apt easily 1 mill. 40% of the current market value and taking over the rest of the payments could be a cheaper route in the 30 year span it takes to pay it off, but it’s def not the right time to buy. Of course the winners of this are the old owners, if the 40% route is taken.

    #25335

    Ian
    Participant

    Apparently the taking over of mortgage buy name is common practice. Some apartments have had five different owners in five years. Thats why we have so many empty apartments in China.

    Example. 100sq apartment (shell) First buyer pays 30% deposit of value of property at 6000 sq.

    One year later sells for a deposit of 30% based on a guestimated value at 7000 sq and so on.

    This is why we dont know the true value of any property in China.

    #25336

    Mike’s Pizza
    Participant

    Two things I would add: I would definitely buy a new property before I bought a secondhand one. As long as you are the one decorating the place, you at least can control the quality of the materials it gets finished with. There are a lot of other posts and articles on Chengduliving about that, if you haven’t already read those. If someone else decorated a place that they never intended to live in, it’s going to be cheap material and shoddy construction.

    The other thing to pay attention to, that I never would have known if my wife hadn’t looked into it, is who is going to manage the property. We’ve all seen those places in Chengdu that are supposedly super expensive, but when you walk around the grounds they are dirty and falling apart. We chose Europe City because the management company, Qinghua Fang, also manages the Qinghua Fang villas on Shenxianshu and even after several years they are still in pretty good condition.

    I think my situation is most similar to yours, being married and a long-term Chengdu resident. I never would have tried to buy a place here without the wife. The thing to remember is there is a huge difference between buying a house to live in, and buying a house for market speculation. If it’s the place where you are going to live, you are paying rent now anyway, but this way you have something to show for it. The only way the so-called “value” of the place really affects you is if you are trying to flip it and make a quick buck, use it as a tax-free bank account, or find yourself in a position where you need your assets liquidated.

    As far as the impending market crash and real estate bubble pop that every seems to be so sure is going to hit China, whatever happens here is not going to be like what happened in the U.S. In Vegas, houses that were built for $300,000 in 2000 were selling for $900,000 in 2004. The houses didn’t change, the material didn’t change, the location didn’t change, the only thing that changed was people’s perception. Banks took advantage of that and offered ridiculous loans with no down-payment and mortgage rates that ballooned after one year, and the people taking those loans agreed to it because they thought they were going to flip the house in 6 months and make at least $100K. They all did, until that last guy who got stuck holding the paper when the music stopped.

    China, however, doesn’t let you buy a house without a 30-40% down-payment, the interest rates are regulated, and they are currently very restrictive about allowing people to purchase multiple properties. While there is a lot of speculation in the Chinese market, it’s done by people who can afford to pay cash for these properties, and they aren’t going to end up on the street if the market fluctuates.

    Also, you will always see less fluctuation in properties that have high occupancy rates.

    Quote:
    The most important is that you do not own land, you can only purchase a condo for 80 years.

    I think it’s 70 years, but I do wonder about that…if I still live here, and if this building still exists, are they just going to put me out on the street when I’m 100? I’m going to need you to supply an appropriate .gif to illustrate that sentiment.

    Quote:
    and takeaways don’t deliver out here (yet) as they think it’s too far ooutside the city.

    FYI, we actually deliver to Nanchengduhui 3 or 4 times a night and our guys only get lost on the way 10% of the time. (Please forgive the shameless plug.)

    #25337
    Brendan
    Brendan
    Moderator
    Quote:
    The other thing to pay attention to, that I never would have known if my wife hadn’t looked into it, is who is going to manage the property.

    This is a huge one, the standard of care and attention is often sub-par at best, and commonly non-existent. I’ve seen so many laughable incidents in my complex it’s just become the comedy that I’ve learnt to live with. If I had bought into the development I would be driving myself nuts complaining to a management that doesn’t appear to be listening, and this is Wharf, a mammoth HK developer.

    Quote:
    As far as the impending market crash and real estate bubble pop that every seems to be so sure is going to hit China, whatever happens here is not going to be like what happened in the U.S.

    Definitely not, we’re in an altogether different system in China. Prices are headed downward though for sure. The Atrium development downtown has dropped it’s residential unit price from 25k per sq to 20k before it’s even completed. They’ve sold (lower floors) well, but have yet to sell out the upper levels. There will be some shrewd buys available in the coming months.

    I had an opportunity to oversee a project in Las Vegas in ’09 on account of the crash. A developer had overextended and was trying to sell his completed properties in lots of 4 (essentially each at 25% original market valuation), and he still couldn’t recoup. My company had considered buying out the project to complete, but after consideration opted out for fear of the market. Crazy times. On a side note, we ended up on a smaller project in Vancouver which was bought out after the one man developer committed suicide. He too had succumbed to the crash, losing $1.5m of his own money, and finding himself without financial backing to complete.

    On the subject of land lease, to my knowledge older properties will have lease terms as low as 50 years on them, but no one is enforcing the removal or vacation of lease expired property, unless they are relocating residents to new (double sq meter) property. This is a very grey area legally, where stories of forced eviction are common, but if this were a concern I would imagine a future compromise for newer properties anyway. It’s not something that would deter me from purchasing. One of the biggest recent controversies regarding land lease in China was the ownership of burial plots. Exploitation of the people even in death!

    #25344
    Charlie
    Charlie
    Keymaster
    Quote:
    if I still live here, and if this building still exists, are they just going to put me out on the street when I’m 100?

    what-happen.jpg

    #25349

    Ian
    Participant

    This complex is next to our building. I’m sure when they sold building 7 and 8 they didnt inform them that the new 2nd ring road would be going past their windows. A snip at 18800 per sqm well over priced.

    #25353
    Brendan
    Brendan
    Moderator
    Quote:
    I’m sure when they sold building 7 and 8 they didnt inform them that the new 2nd ring road would be going past their windows.

    No kidding! I was just at SM Plaza recently, and the new viaduct cuts a hefty path right in front of it now, making the entire area feel very claustrophobic. There must be thousands of purchasers along the route of that thing that are livid.

    #25356
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