China's real estate industry witnessed a fast
growth in 2001, becoming one of the driving forces of the country's
economy in the period. According to the National Bureau of Statistics,
last year funding for real estate development increased by 25.3%
over the previous year to RMB 624.6 billion (USD 75.25 billion).
Zeng Peiyan, Minister of the State Development Planning Commission,
claimed at a press conference early this year that unlike the
bubbles seen in the real estate sector in early 1990s, the real
estate development in the last two years has been healthy. Noticeably,
housing industry has played a key role in stimulating the real
estate development and domestic demand. It shall continue to show
a great potential in the next few years, according to the national
At the national meeting on housing reform held on Feb. 8, 2002
in Shanghai, officials from the Housing and Real Estate Department
under the Ministry of Construction urged that all the cities should
work out their monetary housing subsidy plans by the end of March
and carry out housing reforms based on the plans. Since the real
estate markets vary from city to city, some places are far delaying
their plans, but Shanghai is well ahead and is recognized as having
a comparatively mature housing market. Housing authorities from
the cities in the western area are all studying the experience
of Shanghai in order to work out their own local recipe.
I. Housing Development in Shanghai in 2001
Mrs. Li Juanjuan, key official from the Shanghai Municipal Housing
Administration Bureau, said at the Shanghai Housing Industry Briefing
in March, that the city's housing industry has now entered a vibrant
stage after undergoing three successive periods.
Before 1997, the local authority did not pay attention at all
to integrate planning. After 1997 the situation started to change
and planning got more and more attention. A series of policies
were gradually published by 1999 in the hope to stimulate the
housing market. The most impressive incentives included individual
income tax refunds and monetary housing subsidies. Both policies
set precedent in the country. With this reform, people began to
cater for individual purchases on houses and apartments instead
of getting them from work units. Besides, the city has also scrapped
many transaction fees and eased the formalities. As a result,
not only the first level market but also the second-hand housing
market have been activated. Even more foreigners and Chinese from
outside Shanghai have been attracted to purchase houses and apartments
The following charts can demonstrate the achievements and features
of Shanghai's housing industry in 2001. ("Shanghai Statistics"
published by Shanghai Statistics Bureau)
1. Intensive investment with new structure
In 2001, the city's real estate investment soared 9.6% over the
previous year to RMB 62.03 billion ( USD 7.473 billion) and accounted
for 31.3% in total fixed assets investments.
Most of the investment was absorbed by housing construction,
as shown in the following chart.
Breakdown of Shanghai Real Estate Investment
2. Demand-supply Balance
Last year, 17.58 million square meters were completed for commercial
purpose, in which housing area accounted for 15.67 million square
meters. The total sales of commercial buildings amounted to 17.67
million square meters, including total housing area of nearly
16.48 million square meters. Compared to the supply, demand was
at a slightly higher level. The figures in the following table
show the balance between housing supply and demand.
3. Housing market is upbeat
Much different from Beijing where housing prices are highest
in China, 96.7% of the sold housing area in Shanghai have been
bought by individuals rather than enterprises. This phenomenon
can be attributed to the following aspects:
- It is widely known in China that
people in Shanghai are always keen on improving their living
conditions and thus have cultivated a special favor for housing
purchases. Some surveys imply that most Shanghainese give priority
to investment for an apartment or a house while Beijing people
prefer to purchase a car first.
- The city's steady economic growth
has been pushing forward the city's renovation work and urbanization
progress. Development work such as the"1 City 9 Towns (satellite
cities) Project" and the "Huangpu Riversides Development
Project" will bring radical changes to the overall environment
by not only putting up new business, culture and public facilities,
but also erecting new apartment buildings and houses.
- All in all, the local authority
has successfully implemented a package program that has effectively
stimulated the housing market, including financial schemes and
open-up policies. According to the figures released by the Shanghai
Real Estate Exchange Center, (China Economy Net,25/01/2002),
foreigners purchased 2'973 apartments in Shanghai in 2001, more
than three times the figure for 2000; Chinese from outside Shanghai
bought 24'000 apartments, double the number of the year 2000.
The following chart comparing the second-hand housing market
in Beijing, Shanghai and Guangzhou may display the openness and
easiness of the housing market in Shanghai from another angle.
II. Market Demand: hi-tech and environment-friendly
building materials and construction technologies
Though keeping very positive about the future housing market,
the Shanghai Housing Municipal Administration Bureau has attached
serious attention to the need of vastly improving the construction
quality. At the briefing meeting on the Shanghai housing industry,
Mr. Wang Wenzhong, ex-director general of the Bureau and the chair
of newly-established Shanghai Housing Industry Development Association,
claimed that the long-term objective of the Shanghai housing industry
would be not only to enlarge construction area but also to enhance
the quality with regard to planning and construction. In five
years, the real estate industry, mainly represented by the housing
industry, shall continue to be one of the six pillar sectors of
the city. It is hoped that in the end Shanghai will be recognized
by both domestic and overseas residents as a human-friendly city
for comfortable living.
The current quality of houses and apartments in general are not
very satisfactory as contractors use material with low technology.
In consideration of the mandatory schemes stipulated by the Shanghai
Housing Municipal Administration Bureau, it is getting more urgent
to introduce new material and technology that is energy-saving
and environmentally friendly. By 2005, all housing developers
must fulfill the following requirements:
· to build decorated housing
Initiating decorated housing with sales of nearly 30'000 units
last year, the Shanghai Housing Municipal Administration Bureau
has scheduled that by 2005 all housing should be decorated instead
of semi-finished. Homebuyers can choose the decoration style in
the material menu provided by housing developers. Suppliers recommended
in the menu have to be evaluated and authorized first by the Shanghai
Housing Municipal Administration Bureau.
· All housing must meet the standards of intelligent buildings.
· All material for wall must be energy-saving and thermal
In detail, the city hopes to introduce more foreign supply and
co-operation in the following fields:
1. wall material
Clay brick is officially banned in use throughout the country.
Currently porous bricks are mainly used in construction yet will
be banned as well someday. Thus, air brick technology is called
for. There is only one German joint venture in Shanghai manufacturing
air bricks. Although having undergone difficulties since its establishment
four years ago, the joint venture is picking up business thanks
to the government direction on air bricks.
2. thermal insulating material for walls and windows
The external walls of many buildings are covered with steel reinforced
concrete and concrete mixture, thus have little capability to
preserve warmth and insulate heat. While the city consumes around
50 million tons of coal annually, buildings dissipate about 12
million tons of coal, nearly one forth of the total.
Thermal insulation material that can be applied to external walls
is preferred, since internal application will lessen the usable
floor area. The ideal wall complex shall consist of air bricks
and tiers of water-proof and thermal insulation material.
The same is valid for windows. Most windows do not have good thermal
insulation performance. None meets the standard of heat conductivity
factor 7. Thought unable to make a thorough change right now,
but in the end the local authority will enforce that all windows
to meet thermal insulation criteria.
3. decoration material
Traditionally the housing that people buy is only semi-finished,
hence homebuyers have to hire a contractor to finish interior
decoration. It is not only a tiresome investment of time and money.
Sometimes it can be an incredible headache, for most homebuyers
lack knowledge and power to judge the quality of both the
decoration work and the decoration material. Last year, decorated
housing appeared in Shanghai for the first time. 30'000 units
were sold and this year sales are expected to reach 100'000 units.
Finally by 2005, the semi-finished housing will no longer exist
The Shanghai Housing Municipal Administration Bureau controls
the quality of mandatory decoration work by publishing a "Catalogue
of Government-Recommended Decoration Material". To put it
in a nutshell, building material manufacturers must first apply
with the Bureau. Then the Bureau, together with the Housing Industry
Development Association, will organize a team of experts to appraise
the quality of applied products in accordance with certain criteria.
If the products are up to the standards, they will be insured
by insurance companies and promoted by the government to homebuyers
via housing developers.
Homebuyers can set the decoration style by selecting the specific
decoration material from a list. According to Mrs. Li, the government
welcomes more foreign building material suppliers with really
advanced products to apply for being listed in the catalogue.
At present, homebuyers do not have enough options. For example,
there are only two suppliers of so-called "green paint",
and just one supplier of kitchen sets (Haier, famous brand from
Qingdao, Shandong province) recommended in the catalogue.
4. heating and cooling system
In many buildings, air conditioners are approaching the end of
depreciable life and should be replaced. New types of AC systems
with environmental protection technology will find favor in the
5. utilization of solar-energy and geothermal energy resources
The problem frowned upon by the government is how to accommodate
the utilization of solar and geothermal systems with the specific
features and demand of housing construction in Shanghai. Some
Canadian architecture institutes tried but failed to work out
a cost-efficient proposal.
6. re-use of household discharged water
Shanghai is a city lacking water and land resources. Recycling
of used water is a way to economize on water. There are various
ways to treat used water discharged from household, such as physical,
biochemical and biological processing. In one residence, "Olympic
Garden", such a recycle system has been applied but only
for use in centralized irrigation and cleaning. Occupying too
large a space, such systems are not suitable to a city like Shanghai
with her lack of land area. What is needed is a small household
appliance that individual households can reclaim the water and
reuse it to clean the car, irrigate the garden and flush the toilet
Shanghai is becoming an aging society as 2.466 million people
are already over the age of 65, while in 2000 the figure was 1.93
million, accounting for 11.53% of the city's total population.
Most of the senior citizens are living in old buildings with 5
to 7 stories. Therefore, elevators that are not expensive and
can be added outside the buildings will be demanded in the renovation
projects implemented by the government.
8. relevant Insurance Service
In addition to importing new building material, the authority
also intends to involve foreign insurance companies to insure
building materials and housing performance following government
certification. As mentioned above, insurance is involved in governmental
recommendation of decoration material to homebuyers of decorated
housing. However, no insurer so far has launched the service for
III. Useful addresses
Switzerland is strong in the building material sector and always
attaches significance of the environmental protection to the development
of new building materials and technology. The new-technology-oriented
trend taking place in the housing market of Shanghai shall be
a good opportunity for Swiss suppliers to promote Swiss-quality
products and technologies. The above listed products fit very
well with the advantage of Swiss building material industry. Swiss
suppliers can play a more active role in this market and have
a deserved share of the cake. Interesting companies may refer
to the following contacts and addresses:
1. Responsible authority and organization
- Shanghai Housing Municipal Administration Bureau
Address: No. 99 Beijing Rd. (W), Shanghai 200003
Tel. +86-21- 63 19 31 88 Fax. +86-21- 63 19 30 05
Responsible department: Housing Industry Development Department
Contact person: Mrs. Li Juanjuan, director
- Shanghai Housing Industry Development Association
Address: No. 99, Beijing Rd. (W) , Shanghai 200003
Tel. +86-21- 63 19 31 88 Fax. +86-21- 63 19 30 05