Quotes of the Day
We began with lots of smiles. Our landlord, with trousers still tucked into his socks from having ridden his rickety bicycle over to our house, flashed a big grin and wished my husband and me a happy new year. We smiled back and wished him the same.
Then he leaned in for the killer: he was raising our monthly rent, flouting our contract with the confidence that he, like so many other landlords in Shanghai, would pull off the price hike. My husband and I were astonished. To us, the rent we had been forking over was already far too high, considering the spotty electricity, gas and water.
The place was so poorly heated that I, TIME's Shanghai correspondent, would take coffee breaks from typing in order to warm my hands on a hot mug. Last month I was just about to check into a hotel to write a story—when the electricity finally flickered back on. We thought we were the only people gullible enough to pay such an outrageous amount for our little house. Turns out that there are plenty of others in Shanghai able and willing to pay a lot more, forcing us to seek a new home.
First up was The Emerald, a pristine, gated community where a giant billboard invited us to "Live a Fortune 500 life." Sadly, we couldn't come up with the $9,000 per month Fortune 500 budget. Next was Le Château, a bargain at $13,000 for tennis courts, heated bathroom floors and—this being a château, after all—refrigerated wine cabinets. If that didn't suit us, we could live in Contemporary Spirit Villas, Drama House Historic Villa or the intriguingly named Celebrity in Shanghai.
Touring these swank digs, it's hard to remember that this is the same city where 15 years ago the richest folks found delight simply in a new icebox. The pace of change in Shanghai (double-digit growth rates for the past decade) is so rapid that my real estate agent had upgraded her Nokia cell phone between our first and second meetings—the third mobile she'd got in as many months. Sure, most people aren't living in the châteaus of Shanghai, but incomes have increased so fast that 60% of the city's households now own their own homes, up from practically zero a decade before. Demand is so voracious that housing prices have doubled in three years in parts of central Shanghai. Dusty villas in the fashionable French Concession are selling for millions of dollars, even if they have rotting floorboards and cracking foundations. In December a 1,110-sq-m penthouse complete with an indoor pool and a 21-inch LCD TV in the bathroom made headlines when it sold for a record $4.3 million. Just the right to tour the lavish apartment in Shimao Riviera Garden cost $600 per VIP ticket.
Even the giddiest high-riders are beginning to question how much real estate speculation Shanghai can take. Yes, luxury-residential rents increased 15% last year, but in the next three years the number of new apartments in the city will double due to frenzied construction, leading to a surefire property glut.
Shanghai officials aver that there is no property bubble. But such assurances meant little for me as my husband and I struggled to find a new home. We decided to downgrade from a house to an apartment, but even that didn't help much. An almost-done deal fell through because a South Korean diplomat as well as a banker at Standard Chartered suddenly outbid us by at least $1,000—the agent delicately informed me that we were "too small potatoes" to be pinning our hopes on such a nice apartment. Another potential flat, which had cost $3,000 last June, was listed at $4,500 when I visited it. By the time I'd got home, the agent called to announce a teeny change: the price was actually $5,000. By the time I called back to tell her we might still be interested, the price had risen to $5,500. Not even the Turkish lira inflates as quickly as rent for a Shanghai apartment. In the end, we finally settled on a unit in a 1930s apartment building built during Shanghai's last great boom. Once, the Grosvenor House was one of the most prestigious buildings in town, known for its sweeping garden and Art Deco touches. Today it's been eclipsed by the behemoth modern villas that dot the city. But for us, it's home—until it, too, becomes too rich for us.
- Hannah Beech/Shanghai
- Shanghai's real estate boom means that finding a dream house is a nightmare