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Housing scarcity in various areas

Last Updated: Wednesday, May 19, 2021 - 10:42

 It is estimated by the end of 2019, around 300,000 students from China studied in the United States with approximately 1 million spread out in the entire world. It further estimated that around 2.3 million Chinese nationals are staying overseas. As the pandemic overseas increased not only did many of these cancelled their plan to study overseas, but many of the 2.3 million started to return to China as it was deemed safer. 

These Chinese had acquired similar tastes and demanded similar amenities that they had experienced overseas, and now often liked the same housing that are preferred by the foreigners, as they often are nearby international shops, hospitals, restaurants, bars and schools, so they started renting the now empty houses from the departed expatriate population.
These oversea returnees often favored Shanghai over any other city in the mainland due to its very international reputation it enjoyed – even higher than Beijing’s as Beijing’s status as the capital required it to be a steadfast Chinese symbol without overdue foreign influence.
Shanghai almost saw a drop of 20% of its long-term and 10% of its short-term expatriate population, partly because American’s made up the third highest expatriate population (after Korean and Japanese) and the United States was hit especially hard with the pandemic and there was almost 0 re-entry for expatriates with American passports.
With this new post-COVID situation, many compounds and businesses, who previously favored and preferred foreign nationals, for both branding, reputation and simply happenstance due to its proximity to nearby amenities, shifted their priorities to Chinese nationals to make up their revenue and target quota for this year.
The effect of this on the local housing market in Shanghai has thus finally shown its final outcome: Housing shortages in many of the central and popular areas that previously were occupied by foreigners. Another curious item we have found is that if a compound or area is popular by foreigners, because it was rented by foreigners, they usually had a turnover every 1-3 years. 
However if the same compound is rented primarily by Chinese locals, then they almost often stayed much longer than the 1-3 years and turnover is much lower, and over time it is less likely that foreign tenants will be visiting the compound as it will be known that there are not many openings in that particular compound. This is both good and bad, for every party involved:
For landlord it means that whilst they can enjoy consistent and uninterrupted rent, it also meant that they would generally increase rental very slowly or not at all. It is much easier to increase rental, if you have a 1-3 years turnover, rather than on an existing renewing tenant.
For potential tenants and house/apartment seekers, it means much less housing on the market. It also meant that landlords are less likely to spent the time renovating as less housing meant that any housing that empties up is immediately snatched up - leaving no incentive for the landlord to renovate to make it more appealing. Therefore over time housing conditions are likely to deteriorate.
For agencies it means that if a compound becomes less popular for a particular group, they will less likely show this particular area. Many compounds and areas operate in clusters, if one particular area is less popular it is likely going to affect the entire area unless they have some hard advantages such as an International School nearby. It is more likely agencies will adapt to different, newer or larger compound where more housing is available due to being a larger compound, but this also in the end will affect a compound's exclusivity as generally most bigger compounds are often slightly less exclusive.
So after we have discussed the current situation let us give you some example of the compounds that we have seen no housing at all for the next few upcoming months. That's right, these compounds are completely out of any housing supply as of right now and the next couple foreseeable/predictable months:
All the above compounds are currently with very very limited housing options to no housing options at all in the upcoming months. All of these compounds are all in the Xuhui, Jing'an Districts, so in or surrounding the Former French Concessions. As housing in these areas are popular for Chinese as well as foreigners it becomes very easily for landlords to shift to target local population to rent out spare apartments. 
Comparatively housing in other areas such as Huacao, Minhang are also very scarce at this moment. Huacao, Minhang is next to the International Schools such as the Shanghai American School (SAS) or the British International School Shanghai (BISS) and several other schools are also nearby such as the German, French, Korean and Western International School Shanghai (WISS). Due to this housing here are very popular with foreign families, but due to its very remote location from the city center, local Chinese do not overwhelm these compounds as much as they do in the center. Nonetheless as many International Schools open nowadays local bilingual school such as the Nord Anglia Chinese International School (NACIS) nearby these areas, it has become also more popular with them and also foreign overseas Chinese who bring back their families. Huacao, Minhang is another area that is becoming hard for foreigners to find housing nowadays as turnover is very fast, but not yet as difficulty as it is in the city center.
We are hoping this news helps you put the current housing market into more perspective for you and if you are trying to find housing at this very moment, please do feel free to reach out to us at any time to talk to a qualifying consultant who may help you suggest alternatives or similar housings. Simply drop us an email at info@maxviewgroup.com.
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