SHANGHAI — The Japanese community here is shrinking. As a result, apartment owners who used to rent homes to Japanese business people and their families are having to sell their properties.
Buyers are refusing to renew leases.
Another sign of the times: Golf clubs once popular among Japanese are closing down one after another.
Long-time residential property owners have grown discouraged: The evaporating number of Japanese residents is affecting their rental income.
Rainbow Plaza, a condominium complex in central Shanghai, has offered Japanese residents a great location. It is a one-minute walk from a subway station. It is surrounded by shopping centers and Japanese restaurants. The complex itself even has a small supermarket.
Earlier this year, however, Rainbow Plaza’s residents, mostly Japanese, received notices saying their leases will not be renewed. The property owner has also stopped renting to new residents.
The notices came after a Chinese investment company bought the property. According to a local real estate agent, the new owner plans to renovate each unit to better suit Chinese tastes, then sell the refurbished condos to locals.
A similar story is unfolding at Amenity Garden, which has also been home to a number of Japanese expats. The U.S. investment company that used to own the complex has sold it to a Chinese concern.
Behind the trend is a simple reality: Japanese companies are no longer willing to pay the city’s surging home costs for their Japanese employees.
A second hand condominium in central Shanghai today can fetch 70,000 yuan to 100,000 yuan ($10,458 to $14,940) per square meter. Indeed, a four-bedroom, 185-sq.-meter unit in a building near Rainbow Plaza is priced at 14.5 million yuan.
Japanese companies, however, do not buy. They rent. But a 100-sq.-meter to 120-sq.-meter condo in a complex meant to attract Japanese expats typically costs 20,000 yuan to 25,000 yuan a month. Expensive, yes, but taking China’s recent property boom into consideration, rental yields remain a modest 3% or so.
If Japanese tenants refuse to pay higher rents and move out, owners have an option — sell.
As for those disappearing golf clubs, many of which are near water sources, their owners often say they decided to close them down to protect the environment. Still, there are those who believe these unused pieces of property will play their vague safeguarding roles only for so long. What comes next is anybody’s guess.
At any rate, Japanese expats are fleeing the city’s surging property and rental costs. The number of Japanese living in Shanghai dropped to 47,000 by October 2014 from a peak of 57,000 only two years earlier.
There are other factors behind the trend — a heightened anti-Japanese sentiment, worsening air pollution and other types of inflation.
As long as Japanese businesses remain hesitant to send more employees to China, the Japanese community here will likely remain in downsizing mode. via asia.nikkei.com