Pudong transforms into hot property

PUBLISHED : Wednesday, 24 April, 2002, 12:00am
UPDATED : Wednesday, 24 April, 2002, 12:00am

When Shanghai first announced its Pudong development programme 12 years ago, it was met with polite smiles that disguised grave doubts.

The ambitious plan to develop the backwater district east of the Huangpu River faced an uphill battle to convince locals and foreign investors that Pudong was a desirable place to be.

But the Shanghai government, through a mixture of incentives and careful planning, has worn down resistance to moving across the river that flows through the city.

'The old saying - better a bed in Puxi than a house in Pudong - is a thing of the past,' says Zhang Yaolun, deputy director of the Pudong New Area.

That is now most obvious in the property market. Some of the fanciest apartments in Shanghai are being built in Pudong, an area that would have been considered untouchable only a few years ago.

'Pudong is very hot right now,' says Salina Chen of Wanzhao Property Development, a local property developer. 'Many people from Shanghai are interested in this area, and that was not true in the past.'

Property prices have been strengthening across the city as Shanghai's economy thrives, incomes rise, and banks make financing easy.

'It's now a seller's market,' says George Xu of Colliers International Property Service (Shanghai) Co. 'If I have a good project in either Pudong or Puxi, I can market it.'

Puxi refers to the older, more established section of the city west of the Huangpu River. While property prices in Pudong in general are still below levels in Puxi, the gap is narrowing.

'Prices have been rising at a faster rate in Pudong,' says Miao Yunhua of CapitaLand. 'Pudong is seen as much more attractive than before. Lots more people are willing to move there.'

While apartments in some of the remote areas of Pudong are still priced around 2,000 yuan (HK$1,894) per square metre, many more are around 4,000 yuan. Average prices in Puxi are slightly higher and bumping up against the psychological barrier of 5,000 yuan psm, according to real estate agents.

For Pudong, the top end of the market has already come close to Puxi levels. Projects such as the Riviera Garden or the Singapore-invested Yanlord Garden are asking prices near those for luxury properties in Puxi.

Yanlord Garden, for example, plans to have four towers - three of them 32 storeys tall. They will have a total of 700 units, with the last of the towers to be completed in May next year.

Officials of the development company says they are asking prices of US$1,600 to US$3,000 psm - not far from the top of the range for all of Shanghai. About one-third of their customers are foreigners, according to a sales agent.

Yanlord and Riviera Garden are near the Huangpu River and are benefiting from a government plan to develop much of the waterfront area. The facelift is being undertaken in tandem with the city's bid to expand its green areas as it tries to host Expo2010 - the world's fair. Shanghai is seen as one of the main contenders but even if its bid fails, the land will be redeveloped, say city officials

Another major factor in the change of public perceptions about Pudong is the vast improvement in public transportation. The city once relied on overcrowded ferries to carry residents across the Huangpu River, but these have been replaced by a second subway line, as well as bridges and tunnels for growing numbers of public buses.

The expanding traffic flow, however, means the city must scramble to keep pace, and additional bridges and tunnels are already under construction.

Places in demand in Pudong in the mid-price range are near the subway stops such as Zhangyang Road, Dongchang Road and Century Park - all close to Pudong's now expensive financial district. Other popular areas in the district are near the Yangpu and Nanpu bridges that link Pudong with Puxi.

'The limited choice of quality residences in Pudong up to 1998 resulted in many expatriates choosing to live in Puxi,' says property consultants FPDSavills in a research report. 'The situation has changed dramatically since then, with new high quality residential projects attracting tenants as schools and shopping facilities have improved too.'

Many foreign companies such as General Motors, ThyssenKrupp, Coca-Cola, Sharp, Siemens and Agilent Technologies - to name a few - have set up operations in Pudong. This is bringing more expatriates into the area and increasing demand for services.

Hypermarkets such as Carrefour and Metro and numerous restaurants and pubs have followed the movement to the east.

'Out of habit, people probably still favour Puxi,' says Mr Xu of Colliers International. 'But Pudong will do even better in the future.'