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Economic crisis cuts Shanghai rents by 15%

Shanghai expats willing to negotiate their own deals with individual landlords are likely to strike better bargains thanks to the weakening economy.

 

Shanghai's rental market saw an overall 2.2 percent decline in prices in the fourth quarter in 2008. Though the drop is relatively minor it is enough to give renters the upper hand, according to James Macdonald, from Savills China, a commercial and residential real estate service agency.

 

"Landlords are much more willing to negotiate with tenants, maybe not always dropping down rents, but being a little more flexible with certain agreements in the leasing contract," he says.

 

"They may be willing to take on more short-term stays, consider free housekeeping, or satellite, depending on the apartment."

 

But because individual landlords are much more sensitive to the economic environment, they are willing to take what they can get.

 

As a result, some landlords have dropped up to 15 percent, says Macdonald. "It tends to be the individual landlord that changes the market," he says.

 

As for renting from the larger agencies, such as serviced apartments or building owners, prices remain fairly consistent. Macdonald says expats on company housing subsidies typically receive 7,000 yuan ($1,022) per month, for lower management, rising up to more 100,000 yuan per month for chief executives.

 

"There has been a lot of depressing news, but we don't see a lot of scaling back on expats, maybe with smaller companies, but not with the larger guys," he says. "MNC (multi national corporations) say they do not expect to see a significant drop in their expatriate headcount compared to 2008 levels."

 

However, as the economy worsens and MNCs continue the trend of putting expats on more localized compensation structures and cutting housing subsidies, Macdonald says more expats may consider switching to housing offered by individual landlords. "The quality of service won't be the same, or the amenities, but the quality of the apartment itself shouldn't be that different," he says.

 

(China Daily March 23, 2009)