The record 73.1 million people attending the month-long World Expo in China during October pushed up rents and hotel rates in the Shanghai neighbourhood, which are now falling sharply, by up to 50% according to reports.
During the event two bedroom apartments in the area surrounding the Expo Park venue on the banks of the Huangpu river were fetching as much as 6000 – 10000 Yuan per month (with those in a 1.2 mile radius attracting the highest rents), but now rents have fallen 50% in the area according to Chen Yi, manager of the Expo branch of the Centaline Property Agency Ltd.
Hotel rates in the area fell by 47% from October to November, according to Qunar, China’s largest travel website tracking the city’s 2,000 hotels.
The problem should not be a drastic one or a lasting one; in fact all that should be lost is the event profiteering rates, which we always see at such big events. For instance, during the Scottish golf open flats in the town of Girvan, near the Championship course at Turnberry fetch rents of up to £2000 for the week, where normally the rent is £700-£900 per month. Also, in this case the owners can now turn to the 270 billion Yuan invested in the local infrastructure to host the event.
This is confirmed by Century 21 China Real Estate which is the biggest in Shanghai in terms of branch number. Huang Hetao, a researcher with the firm says rents that tripled during the event have fallen back to the level they were at the start of the year.
“Rents have dropped by an average of 20 percent since the end of the event, he said.
“Landlords would rather cut rents than leave the apartments empty,” he added.
“Rents for homes near the Expo Park were largely affected by the influx of short-term visitors and workers this year,” said Qu Anxin, a Shanghai-based researcher at Centaline, the city’s biggest brokerage for mid- to high-end homes. “It’s a nice and convenient area to live, especially after the government built up the subway lines and shopping malls.”
The area certainly has a lot going for it. The authorities built two airport terminals, extended the subway system to 400 kilometres and carried out a 3 year renovation of the city’s colonial-era waterfront boulevard, the Bund.
Authorities in Shanghai built two airport terminals and undertook a three-year renovation of The Bund, the city’s colonial-era waterfront boulevard, lined with historic buildings, across the river from the Expo Park. China’s richest city also accelerated its expansion of the subway system to more than 400 kilometres to cater to the influx of visitors, making it the biggest city transport underground network in China.
According to data on the World Expo official website, Expo Park spans 5.3 square kilometres with one side on the banks of the Huangpu River. The Shanghai Academy of Social Sciences estimates that the event, which hosted pavilions from 190 nations including the US and North Korea, will have increased Shanghai’s economy growth to over 8.5%, compared to the 8.2% recorded last year.
Given the fact that revenues from Centaline’s Expo units fell 80% after the event according to Chen; this looks like a very conservative estimate.
Revenue from home rental transactions at Centaline’s Expo location fell 80 percent after the event ended from the peak in April, said Chen. Apartment leases are now signed for at least a year rather than three to six months previously, he said.
Photo credits: Shannon Yeh via Flickr